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What caused the U.S. stock market to crash in 1929?

AThere was a financial panic after investors were unable to repay loans to brokers.
BHigh tariffs raised prices, which crippled world trade.
CBanks across the country were forced to close.
DA large drought caused defaults on farm mortgages.

Verified Answer :

BodaciousT

The answer is A because no one could pay back their loans especially investors.

MrZieleniewo

Answer:  A. There was a financial panic after investors were unable to repay loans to brokers.

Explanation:

There was much speculative buying on the stock market in "the Roaring '20s," as the decade was known.  In the 1920s, people were so eager to invest and earn profits through the stock market that they bought stocks "on margin."  In other words, they paid for only a marginal percentage of the stocks with their own funds, and borrowed bank funds for the rest of the purchase.  That meant the banks were complicit in this arrangement too, by allowing those sorts of loans. By the late 1920s, 90% of the purchase price of stocks was being made with borrowed money.  This inflated the market in a way that spiraled out of control, and in 1929 the market crashed.

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