AP Success - AP European History: 1920s Economic Optimism & Culture
Stock Prices Will Stay at High Level for years to Come, The New York Times, Oct. 13, 1929.“Among the yardsticks for predicting the behavior of stocks which have been rendered obsolete,” Dr. Dice went on, “are the truism that what goes up must come down, . . . that stock prices cannot safely exceed ten times the net earnings available for dividends on the common stock per share.” “The day of the small investor is here. Once despised and turned away, he is now sought day and night. The appeals come from the best banking houses as well as from the fly-by-night operator. The wage earner is made aware of how easy it is to build up an estate by small installment payments.”
Question 1
The excerpt from The New York Times reflects which of the following economic trends of the late 1920s?
The widespread belief in the continuous growth of the stock market
The cautious approach to stock investments following the post-war recession
The government's intervention to regulate and stabilize the stock market
The decline of public interest in the stock market due to economic uncertainty
Question 2
The reference to the 'small investor' in the source is indicative of which broader societal change during the 1920s?
The increasing wealth gap between the rich and the poor
The decline of traditional banking institutions in favor of new financial instruments
The democratization of the stock market and the involvement of ordinary citizens in financial speculation
The rise of socialist ideologies advocating for collective ownership of capital
Question 3
The source's claim that 'stock prices cannot safely exceed ten times the net earnings' suggests which of the following about the period's economic mindset?
A strict adherence to historical financial ratios as a guide for investment
A government-imposed limit on stock price to earnings ratios to prevent speculation
A widespread understanding of the inherent risks associated with stock market investments
A dismissal of traditional metrics for evaluating stock value in favor of more optimistic assessments
Question 4
The tone of the source regarding the future of stock prices can best be described as:
Cautious and warning of an impending crash
Confident and dismissive of potential downturns
Neutral, providing an objective analysis of market conditions
Pessimistic, predicting a severe economic depression
Question 5
The appeal to the 'wage earner' to invest in the stock market is most closely associated with which of the following developments?
The growth of labor unions and collective bargaining for workers
The establishment of social security systems to provide for workers in retirement
The expansion of consumer credit and the culture of buying on margin
The implementation of progressive taxation to redistribute wealth
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