Final answer:
The Leo Frank case amplified anti-Semitism, as Southern leaders campaigned against Jewish businesses. This contributed to a culture of discrimination, but the case itself didn't cause an increase in racial inequality in the South.
Step-by-step explanation:
The case of Leo Frank did not lead to an increase in racial inequality itself, but it did highlight the pervasive anti-Semitism and racial tensions of the time. The correct answer to the question would be option B: Southern leaders like Tom Watson began an anti-Semitic campaign against Jewish businesses. The case amplified existing prejudices and contributed to a climate where discriminatory practices against various groups, including Jewish and African Americans, were reinforced. In the broader context of racial discrimination, the period witnessed increasing segregation and violence from organizations like the Ku Klux Klan, and enduring practices such as the Jim Crow laws.