THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Germany ceased reparation payments to the United States
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the Federal Reserve increased the money supply
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investors lost confidence in the market and rushed to sell their shares
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depositors lost their investments and tried to withdraw all of the savings from banks
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Detailed explanation-1: -On October 18, the stock market plummeted, and the frantic rush to buy equities gave way to an equally frantic rush to sell. On October 24, the first day of real panic, known as Black Thursday, a record 12.9 million shares were traded as investors scrambled to recoup their losses.
Detailed explanation-2: -The main cause of the Wall Street crash of 1929 was the long period of speculation that preceded it, during which millions of people invested their savings or borrowed money to buy stocks, pushing prices to unsustainable levels.
Detailed explanation-3: -Business houses closed their doors, factories shut down and banks failed. Farm income fell some 50 percent. By 1932 approximately one out of every four Americans was unemployed.
Detailed explanation-4: -People were overconfident that the market would continue to grow, leading many people to “buy on margin.” Buying on margin means purchasing shares with mostly borrowed money. People were overconfident about the market and felt comfortable taking on loans and banks felt comfortable issuing them.