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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Paying only cash for stock purchases
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Selling stocks in very rapid succession
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Buying stocks with only a down payment
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Sharing insider information on stock trades
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Detailed explanation-1: -Investing in the speculative market in the 1920s led to the stock market crash in 1929, which wiped out a great deal of nominal wealth. Most historians and economists agree that the stock market crash of 1929 wasn’t the only cause of the Great Depression.
Detailed explanation-2: -By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value. Among the other causes of the stock market crash of 1929 were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.
Detailed explanation-3: -Oversupply and overproduction problems Mass production powered the 1920s consumption boom. But it also led to overproduction on the part of many businesses. Even before the crash, they started having to sell goods at a loss. A similar crisis was occurring in agriculture.
Detailed explanation-4: -According to a 1989 analysis by Milton Friedman and Anna Schwartz, the recession of 1920–1921 was the result of an unnecessary contractionary monetary policy by the Federal Reserve Bank. Paul Krugman agrees that high interest rates due to the Fed’s effort to fight inflation caused the problem.