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lesson pretestMultiple Choice

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Question 3 • US History Studies Since 1877

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

Answer
A
Investors bought more stocks with cash, and the stock market rose.
B
Investors took more risks on stocks, and the stock market declined.
C
Investors bought more stocks on margin, and the stock market rose.
D
Investors took fewer risks on stocks, and the stock market declined.

Explanation

As credit became easier to get during most of the 1920s, investors could borrow money to buy stocks, often purchasing them on margin. The increased demand helped stock prices rise, so the correct choice is “Investors bought more stocks on margin, and the stock market rose.”

AI-written and checked against the verified answer.

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