Question

Match each economic practice of the 1920s with its consequence during the Great Depression.

(2 points)
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Buying on margin
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Overproduction of goods
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Reduced business regulations
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The installment plan
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Answer 1

Buying on margin — Amplified the 1929 crash: margin calls forced fire sales, wiping out investors and spreading losses to banks.

Overproduction of goods — Large surpluses drove prices down, causing cutbacks, factory closures and mass layoffs.

Reduced business regulations — Allowed risky banking/corporate practices and weak oversight, contributing to bank failures and financial collapse.

The installment plan — Built up consumer debt so when incomes fell many defaulted, collapsing consumer demand.