Question

How did over-speculation effect the world in the late 1920s? (U2.1) (Unit 1-4 EOC Study Notes) TEKS - 16(B) You will choose three answers from the list below. (3 points) Responses People purchased stocks on borrowed money (on margin). People purchased stocks on borrowed money (on margin). There were so many cheap products available that people loaded up on stuff they didn't really need. There were so many cheap products available that people loaded up on stuff they didn't really need. Wealthy people started switching their big houses from candles to electricity. Wealthy people started switching their big houses from candles to electricity. Investment stocks were valued for more than their actual worth. Investment stocks were valued for more than their actual worth. There was limited government regulation, so business owners did whatever worked for them.

Answer 1

In the late 1920s, over-speculation had significant effects on the economy and contributed to the stock market crash of 1929. The three correct responses that illustrate how over-speculation affected the world during this time are:

1. People purchased stocks on borrowed money (on margin). - Many investors bought stocks using borrowed funds, increasing their risk and the potential for loss when the market declined.

2. Investment stocks were valued for more than their actual worth. - Over-speculation led to a disconnect between stock prices and the actual value of the companies, causing inflated stock prices that were unsustainable.

3. There was limited government regulation, so business owners did whatever worked for them. - A lack of regulatory oversight contributed to speculative practices and a focus on short-term gains, leading to unchecked risk-taking in the financial markets.

These factors combined to create an unstable economic environment, ultimately culminating in the stock market crash and the onset of the Great Depression.