Questions: What were investors afraid the Federal Reserve Board would do in March 1929? stop sales of RCA stock make it harder to buy and sell stocks on the stock market force the stock market's paper value to match its real value end its policy of deregulation of the stock market

What were investors afraid the Federal Reserve Board would do in March 1929? stop sales of RCA stock make it harder to buy and sell stocks on the stock market force the stock market's paper value to match its real value end its policy of deregulation of the stock market
Transcript text: What were investors afraid the Federal Reserve Board would do in March 1929? stop sales of RCA stock make it harder to buy and sell stocks on the stock market force the stock market's paper value to match its real value end its policy of deregulation of the stock market
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Solution

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The answer is: make it harder to buy and sell stocks on the stock market.

Explanation for each option:

  1. Stop sales of RCA stock: This option is incorrect. There is no specific historical evidence that investors were particularly concerned about the Federal Reserve stopping sales of RCA stock in March 1929. RCA was a popular stock at the time, but the broader concern was about the overall stock market.

  2. Make it harder to buy and sell stocks on the stock market: This option is correct. In March 1929, investors were worried that the Federal Reserve might take actions to tighten credit, which would make it more difficult to buy stocks on margin. Buying on margin was a common practice where investors borrowed money to purchase stocks, and any tightening of credit would have made it harder to continue this practice, potentially leading to a decrease in stock prices.

  3. Force the stock market's paper value to match its real value: This option is incorrect. While there was concern about the overvaluation of stocks, the Federal Reserve did not have the means to directly force the stock market's paper value to match its real value. The concern was more about the potential for a market correction rather than a direct intervention by the Federal Reserve to adjust values.

  4. End its policy of deregulation of the stock market: This option is incorrect. The Federal Reserve's role was not primarily about deregulation of the stock market. The concerns in 1929 were more about monetary policy and credit conditions rather than regulatory changes. The major regulatory changes to the stock market came later, after the 1929 crash, with the establishment of the Securities and Exchange Commission (SEC) in the 1930s.

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