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Set 3: Central Ideas (Intermediate)

Explanation

Answer: C

PASSAGE

The following text describes the Stock Market Crash of 1929. The Wall Street Crash of 1929 seems to have been triggered by a sudden loss of confidence. For years, the market had been fueled by speculation and buying on margin (borrowing money to buy stocks). When prices began to dip, panic selling ensued. As investors rushed to sell their shares to pay off debts, prices plummeted further, wiping out billions of dollars in wealth and signaling the beginning of the Great Depression.

What practice contributed to the severity of the 1929 crash?

A. Strict government regulation of the stock market
B. Buying stocks on margin (with borrowed money)
C. A shortage of stocks available for purchase✓ Correct
D. High taxes on investment profits

Detailed Explanation

Choice B is correct. The text states the market was fueled by 'speculation and buying on margin (borrowing money to buy stocks).'

Key Evidence:

• "buying on margin (borrowing money to buy stocks)"

• "pay off debts"

Why others are wrong: A (Not mentioned (lack of regulation typically cited)), C (Not mentioned), D (Not mentioned).

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