In 3–5 sentences, explain 2 causes and 2 effects of the stock market crash of 1929.
(4 points)
One cause of the stock market crash of 1929 was excessive speculation, as many investors were buying stocks on margin, or with borrowed money, in the hopes of making quick profits. Another cause was the uneven distribution of wealth, as the majority of the population did not participate in the stock market, leading to an increasing gap between the rich and the poor.
One effect of the crash was widespread panic and a loss of confidence in the economy, leading to a rapid decline in stock prices. Another effect was the collapse of many banks and businesses, as they were heavily invested in the stock market and suffered significant losses. This resulted in a severe economic downturn and the start of the Great Depression.