Answer:
The correct answer is B. Overspeculation in the stock market directly contributed to the economic instability of the United States in 1929.
Explanation:
The crisis of 1929, called the Great Depression, was preceded by a speculative boom in the mid-1920s, during which millions of Americans invested in stocks. Growing demand for stocks drove up their prices, which attracted more and more new investors who wanted to get rich on investment in stocks. This led to the formation of an economic bubble. At the same time, many investors bought shares on credit, borrowing the necessary funds from banks. When stock values began to fall, investors lost money and were unable to pay the loans they had requested from banks.
Banks that previously financed the purchase of shares with their loans were not able to repay their debts and filed for bankruptcy. In this way, a spiral of crisis and cessation of payments was formed, where people could not pay the banks, the banks could not cancel their debts, and those who had mortgage loans saw their properties foreclosed.
While millions of people lost all their livelihoods on the exchange, enterprises lost credit lines and closed, causing unemployment to rise.
