In 3–5 sentences, explain 2 causes and 2 effects of the stock market crash of 1929.
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One of the causes of the stock market crash of 1929 was the speculative bubble that had formed in the stock market. This was fueled by excessive buying and speculation on stocks, leading to inflated prices. Another cause was the easy availability of credit, which encouraged investors to borrow money to invest in the stock market.
One of the effects of the stock market crash was the Great Depression, which was a severe economic downturn that lasted for a decade. The crash led to widespread panic selling, causing stock prices to plummet. This resulted in a significant decline in corporate profits, leading to mass layoffs, bankruptcies, and a decrease in consumer spending.
Another effect was the loss of people's savings and investments, as many individual investors had put their money in the stock market. With the crash, their investments became virtually worthless, leading to financial ruin for many. This loss of wealth had a significant impact on individuals and households, causing a decline in living standards and a decrease in confidence in the financial system.