What was one of the contributing factors for the stock market crash?

Study for the Praxis II Elementary Education Test (5001). Access flashcards and multiple choice questions, each with hints and explanations. Get prepared for your exam!

The choice indicating increased credit buying as a contributing factor to the stock market crash is correct because during the period leading up to the crash, many investors engaged in purchasing stocks on margin. This means they borrowed money to buy more stocks than they could afford, anticipating higher prices and greater returns. When stock prices began to fall, these investors were unable to cover their debts, leading to a widespread sell-off that exacerbated the market downturn.

The practice of using borrowed money to invest significantly increased the market's volatility and left many investors vulnerable to heavy losses, which contributed to the overall decline of stock prices during the crash. This was part of a larger culture of speculative investment that characterized the market prior to the crash, making the reliance on credit a critical factor in the financial disaster.

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