Part of the reason for the stock market crash was:
A) the high rate of deflation in the 1920s
B) the tax policies of the 1920s that hurt the wealthy, who might otherwise have bought more stocks
C) the buying of great amounts of stock on margin
D) the low tariff, which allowed imports to corner several important American markets
E) the remarkably poor returns on government bonds in 1929

Question

Quizplus · Accepted Answer

The buying of great amounts of stock on margin significantly contributed to the stock market crash. Many investors purchased stocks with borrowed funds, meaning they were buying on margin. When the stock market began to decline, margin calls were issued, requiring investors to pay back the borrowed money. This led to a domino effect of selling stocks to cover margin calls, causing a sharp decline in stock prices.

Part of the Reason for the Stock Market Crash Was