APUSH-Which factor played a major role in the stoc

Which factor played a major role in the stock market crash of 1929? A) Overproduction in agriculture B) A sudden decrease in consumer spending C) The creation of the Federal Reserve D) Excessive speculation and buying on margin

D

Key Concept

KC-7.3.II: The 1920s saw a boom in consumer culture and economic prosperity, but it was also a period of significant economic instability and speculation, particularly in the stock market.

Explanation

The stock market crash of 1929 was largely due to excessive speculation and buying on margin. Speculation refers to the practice of making high-risk investments with borrowed money, with the hope that the investment will yield a large return. Buying on margin is a type of speculation where investors borrow money to buy more stocks than they can afford. This created an inflated and unstable market. When investors began to sell off their stocks, it triggered a panic that led to the crash.

What is speculation in the stock market?, What is buying on margin?, What were the effects of the 1929 stock market crash?, Generate me a similar question

What is speculation in the stock market?

Speculation in the stock market refers to the practice of buying and selling stocks based on future price predictions. Speculators make these trades in hopes of making a profit from the price movements. They do not necessarily have an interest in the underlying assets or companies. Instead, they are interested in the potential for profit from the price changes. This concept is relevant to AP US History in the context of various economic booms and busts. For example, speculation played a significant role in the Stock Market Crash of 1929, which led to the Great Depression.

Key Concept

KC-7.1.II: The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across the world; in most countries, it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century.

Explanation

Speculation can lead to inflated stock prices as people buy in hopes of selling at a higher price later. However, if the prices do not continue to rise, or if they fall, speculators may sell off their stocks to cut their losses. This can lead to a rapid drop in stock prices, as happened in 1929. The crash and the ensuing depression had profound effects on the US and world economy, and led to changes in how the US government regulates the stock market.

What led to the Stock Market Crash of 1929?, How did speculation contribute to the Great Depression?, What is the role of speculation in the economy?, Generate me a similar question

Generate me a similar question

What was a major factor that contributed to the Stock Market Crash of 1929? (A) Overproduction in agricultural sector (B) Speculation in the stock market (C) Increase in government regulations (D) Decrease in international trade

Answer: A,Answer: B,Answer: C,Answer: D

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