In the 1920s what did business and industries do that caused the economy to slow down?
a. they hired more workers.
b. they speculated in the stock market.
c. they bought stocks on margin.
d. they overproduced goods.

The correct option is "b. They speculated in the stock market."

The North American economy of the twenties was based on fragile pillars because, to a large extent, it was oriented to speculation. A substantial part of the business profits was not destined to improve productivity but to easy and fast businesses. The monetary surpluses went to the stock exchanges where low-priced stocks were acquired and sold as soon as their price was high.

From 1926 that economic model went into decline. The saturation of the market and the decrease in demand caused a decrease in industrial investment. The countryside was affected by an overproduction crisis and farmers suffered a substantial reduction in their profits. Speculation not only affected the stock market, it also extended to areas such as the second home: there were areas, such as Florida, that were the prey of an unprecedented real estate boom. The houses were bought and sold with the sole purpose of obtaining quick profits and their prices doubled or tripled in just a few months.

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