How Could This Happen?By the test you will be able to answer:

• Why did the stock market crash?

• Why was the economy so bad for so long?

• How did it affect people?

• How did the government try to stop it?

• Did it work?

• What made the economy get better again?

• Could this happen again? Are we headed to another Depression?

Could another depression happen?

This is a video!

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Unemployment now

Unemployment:

•Topped out at 25%1933

• Around 10% looking for work

• Around 17% totalNow

Stock market

• Stock: A small piece of a company that is bought

and sold

• Stock market: A place where stocks and bonds

are “traded” (bought and sold)

• Goal is to buy the stock, hold on to it for a time,

and sell it for more than you paid

Risks of the Market

• Stocks go up and down

Stock price

of Apple this

year

iPad

announced

iPads go

on sale

Holiday

shopping

season

Short-term

investors

selling

September 1929:Greatest Crash in history

Causes

1. Speculation: Buying stock with the plan to sell it again quickly when the market rises

2. Buying on margin: Borrowing money to buy stocks

Example: I make a down payment of $5 for a $50 share, you promise to pay back the rest when you sell the stock I can buy $1,000 worth of stock for only

$100. If stock crashes, I still owe $900

causes

3. Using too much credit: Booming economy, advertising, easy loans and installment plans made people borrow more than they could pay back

4. Overproduction: Too much stuff to sell, no one to buy it

5. Unequal distribution of wealth: Rich people got richer but workers’ wages didn’t rise, so they couldn’t buy the stuff being made

causes

6. Government policies: No regulation of the stock

market

7. Problems in European economy impacted the

U.S.

8. Weak farm economy: production too high, prices

too low, debt too much

But most of all..

• Overconfidence: Investors felt like if they bought

stocks they couldn’t lose.

They were wrong.