Question
Stock market crash of 1929. There are two causes and two effects, which are they?
A. Bank demanded immediate payment for loans they had given to investors
B. Investors made high risk purchases often using low down payments
C. Low interest rate rates and high money supply encourages risky investments
D. in one year the stock market lost more than half its value
A. Bank demanded immediate payment for loans they had given to investors
B. Investors made high risk purchases often using low down payments
C. Low interest rate rates and high money supply encourages risky investments
D. in one year the stock market lost more than half its value
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Answered by
GPT-4o mini
The Stock Market Crash of 1929 had several causes and effects. Based on the options you've provided, the following are appropriate:
**Causes:**
1. **B. Investors made high risk purchases often using low down payments:** Many investors bought stocks on margin, meaning they only paid a small percentage of the stock's price upfront, borrowing the rest, which increased the risk significantly.
2. **C. Low interest rates and high money supply encourage risky investments:** The economic environment of the late 1920s, with low interest rates and easy access to credit, led to speculative investments in stocks.
**Effects:**
1. **A. Bank demanded immediate payment for loans they had given to investors:** After the crash, banks were unable to cover margin calls and demanded repayment from investors, leading to further financial strain.
2. **D. In one year the stock market lost more than half its value:** The stock market's dramatic decline had profound economic repercussions, setting the stage for the Great Depression.
So, the causes are B and C, and the effects are A and D.
**Causes:**
1. **B. Investors made high risk purchases often using low down payments:** Many investors bought stocks on margin, meaning they only paid a small percentage of the stock's price upfront, borrowing the rest, which increased the risk significantly.
2. **C. Low interest rates and high money supply encourage risky investments:** The economic environment of the late 1920s, with low interest rates and easy access to credit, led to speculative investments in stocks.
**Effects:**
1. **A. Bank demanded immediate payment for loans they had given to investors:** After the crash, banks were unable to cover margin calls and demanded repayment from investors, leading to further financial strain.
2. **D. In one year the stock market lost more than half its value:** The stock market's dramatic decline had profound economic repercussions, setting the stage for the Great Depression.
So, the causes are B and C, and the effects are A and D.
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