Instructions

Answer the question based on the passage given below.

In September of 1929, traders experienced a lack of confidence in the stock market’s ability to continue its phenomenal rise. Prices fell. For many inexperienced investors, the drop produced a panic. They had all their money tied up in the market, and they were pressed to sell before the prices fell even lower. Sell orders were coming in so fast that the ticker tape at the New York Stock Exchange could not accommodate all the transactions.

To try to reestablish confidence in the market, a powerful group of New York bankers agreed to pool their funds and purchase stock above current market values. Although the buy orders were minimal, they were counting on their reputations to restore confidence on the part of the smaller investors, thereby affecting the number of sell orders. On Thursday, October 24, Richard Whitney, the Vice President of the New York Stock Exchange and a broker for the J.P. Morgan Company, made the effort on their behalf. Initially it appeared to have been successful, then, on the following Tuesday, the crash began again and accelerated. By 1932, stocks were worth only twenty percent of their value at the 1929 high. The results of the crash had extended into every aspect of the economy, causing a long and painful depression, referred to in American history as the
Great Depression.

Question 33

The cause of downfall of share market was-

Solution

Option A is incorrect. This is because the passage does not attribute the cause of the downfall of the share market to inexperienced investors. It was not an investing error that lead to the Great depression.

Option B is vague and is incorrect.

Option C cites the lack of confidence in the stock market's ability. This option misrepresents the information present in the passage. The traders experienced a lack of confidence in the ability of market to continue the phenomenal rise. They still had confidence in the stock market, they just did not have confidence that it would keep having the phenomenal rise that it had.

Option D is the most appropriate answer. The initial drop produced a panic, that cascaded rapidly and culminated in the great depression.


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