Which term describes the rapid buying of stocks mainly because investors expected prices to keep rising?
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Correct answer: Speculation
Speculation means buying assets in hopes of making quick profits from price increases. In the 1920s, heavy speculation pushed stock prices far beyond the real value of many companies.
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More Causes of the Great Depression questions
- Why were many stock prices considered overvalued before the crash?
- Which economic problem affected many American farmers during the 1920s before the Great Depression?
- How did unequal distribution of income contribute to the Great Depression?
- What is overproduction in the context of the Great Depression's causes?
- How did consumer credit in the 1920s contribute to economic weakness?
- What happened when many banks failed during the early Great Depression?