Question

In 3–5 sentences, explain 2 causes and 2 effects of the stock market crash of 1929.

Answer 1

The crash was driven largely by rampant speculation—many investors buying stocks on margin created an unstable bubble—and by excessive credit and weaknesses in the banking system that amplified losses. When prices plunged, panic selling wiped out fortunes and triggered waves of bank failures as lenders and depositors were left insolvent. The collapse of investment and consumer spending plunged the U.S. (and much of the world) into the Great Depression, producing mass unemployment and prolonged economic contraction.