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One of the key problems leading up the stock market crash in October 1929 and subsequent...

One of the key problems leading up the stock market crash in October 1929 and subsequent to that was Federal Reserve Board actions restricting the supply of credit.

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Weeks before the stock market crash of October 1929, the federal reserve bank raised the interest rates from 5% to 6%. This affected the investor enthusiasm and thus reduced the economic growth. Market became highly unstable. Thus an increase in interest rate lead to limited supply of credit and this became of of the major reason of the wall street crash. Hence the above statement is True.

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