A) What were the factors that led to the stock market collapse on Black Tuesday? (4 points)

Question

underproduction, lack of government regulation, and bank runs
underproduction, too much government regulation, and bank runs
overproduction, too much government regulation, and bank runs
overproduction, lack of government regulation, and bank runs

Answer 1

The factors that led to the stock market collapse on Black Tuesday primarily include overproduction, lack of government regulation, and bank runs. Therefore, the correct option is:

overproduction, lack of government regulation, and bank runs.

Here’s a brief explanation of each factor:

1. Overproduction: In the 1920s, industries produced more goods than could be consumed, leading to unsold inventories and declining prices. This excess production contributed to the economic instability that preceded the crash.

2. Lack of Government Regulation: During this period, there was minimal regulatory oversight of the stock market and financial institutions, which allowed speculative practices and risky investments to proliferate without adequate checks.

3. Bank Runs: As confidence in the economy waned, many people rushed to withdraw their savings from banks, which led to widespread bank failures and further eroded public trust in the financial system.