SAT Subject US History Practice Question 255: Answer and Explanation

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Question: 255

56. The usual reaction of the stock market to a political crisis is

A. for the Stock Exchange to close for a week
B. a rise in stock prices and an increase in buying
C. the stoppage of payment on government bonds
D. a fall in stock prices and an increase in selling
E. an increase in foreign investment

Correct Answer: D


During any national crisis, people panic and want to sell their stocks. Since the supply of available stocks rises rapidly, the price falls.

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