Question

How did buying stocks “on the margin” intensify the negative effects of the stock market crash?

A, Opposes democracy
B, Uses secret police
C, Allows individuals to own property
D, Creates powerful leaders

Answer 1

Answer:

When the stock prices dropped, all the people who had borrowed to buy on the margin were in trouble. They could not repay their loans because the stock prices had not risen. When they could not repay their loans, they went broke. Because so many people could not repay loans, banks failed.