Question

Which showed that the economy was weaker than the stock market indicated during the 1920s?

Answer 1

The Great Depression was an economic downturn that occurred in the United States in 1929. The prelude to this was the decade of the 1920s, known as "the roaring twenties" because the nations total wealth was almost doubled during this time.

The stock market was on the rise, causing the common citizen to invest their savings and even get loans in order to spend in stocks with the expectation that the rising trend in the value of the stocks will be superior in comparison to the interest rate of the loan.

By the end of the 20s, the overall industrial output had already declined and unemployment had risen. On the other hand, stocks were still high due to mass speculation by investors. The prices would eventually drop aggressively causing losses to millions of citizens.

Answer 2

I think the answer would be the second one, if it was phrased slightly different. A main problem was that people would buy everything with credit rather than cash, and ended up not having the money to pay it back.