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For most of the 1920s, how did the growth of credit affect the stock market?

In the 1920s, there was a rapid growth in bank credit and loans. Encouraged by the strength of the economy people felt the stock market was a one way bet. Some consumers borrowed to buy shares. Firms took out more loans for expansion. Because people became highly indebted, it meant they became more susceptible to a change in confidence. When that change of confidence came in 1929, those who had borrowed were particularly exposed and joined the rush to sell shares and try and redeem their debts.


nvestors bought more stocks on margin, and the stock market rose.
Investors bought more stocks with cash, and the stock market rose.
Investors took fewer risks on stocks, and the stock market declined.
Investors took more risks on stocks, and the stock market declined.

Respuesta :

johnkellock
Investors bought more stocks on margin, and the stock market rose. I would say
scouteo

The correct answer is A) investors bought more stocks on margin, and the stock market rose.

For most of the 1920s, the growth of credit affect the stock market in that investors bought more stocks on margin, and the stock market rose.

The excerpt explains what happened in the 1920s with the United States economy before the Great Depression. During the 1920s, US citizens had the money or the credit to spend on necessary and unnecessary things. Indeed, that is why the time is called "the Roaring 1920s." People abused credit to get things. Everything changed in October 1929 after the US stock market crash that caused the beginning of the Great Depression. Thousands of people lost their jobs, companies had to close and many banks went into bankruptcy.

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