THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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low worker productivity
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high income taxes
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decreasing tariff rates
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buying stocks on margin
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Detailed explanation-1: -The concept of “buying on margin” allowed ordinary people with little financial acumen to borrow money from their stockbroker and put down as little as 10 percent of the share value.
Detailed explanation-2: -By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the stock market crash of 1929 were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.
Detailed explanation-3: -How did buying stocks on margin contribute to the stock market crash? As stock sales made prices fall, brokers demanded loan repayments from investors who had bought on margin, which forced them to sell their stock, setting off further decline.