Kelly Hajdasz John F. Kennedy Middle School khajdasz@uticaschools

1. Kelly Hajdasz John F. Kennedy Middle School khajdasz@uticaschools.org

2. Why Buy Stock? • Pepsi stock is $10/share. You have $100. How many shares of Pepsi stock can you buy? Ans.__________________________ • Pepsi stock goes up to $15/share. You sell your stock. What is your profit? Ans.__________________________

3. Buying Stock on Margin (pay 10%,borrow 90%) • Pepsi stock is $10/share. You have $100. With $100 you could borrow $900 to buy stock on margin. How many shares of Pepsi stock can you buy on margin? Ans.___________________________ • Pepsi stock goes up to $15/share. You sell your stock. What is your profit? Ans.____________________________

4. Can you lose money in the stock market? • I would rather use my own money to invest and make a profit. Agree or disagree. Why? • I would rather use someone else’s money to invest and make a profit. Agree or disagree. Why?

5. Causes of the Great Depression (1929-1941) Buying on Margin/Stock Market Crash • Rash of selling caused stock prices to fall • Brokers asked investors to pay the money still owed on stocks bought on margin • Investors who could not pay had to sell their stocks • Prices dropped even more • Black Tuesday: October 29, 1929 – prices fell sharply as no one was buying stock (stocks were now worthless)

6. Problems in the Banking System • During the 1920’s, banks made loans to Americans who invested in the stock market • When the stock market crashed, borrowers could not repay their loans • Without money from the loans, the banks could not give depositors their money when they asked for it • Many banks were forced to close • Depositors lost their money they had in the bank Bank Run Media — History.com

7. Overproduction/Underconsumption • Overproduction – farms and factories produced huge amounts of goods in the 1920’s • Wages did not keep up with the cost of goods • Underconsumption – Americans were not buying as many products • Factories closed or laid off workers Too many goods, too few buyers

8. Why do people own businesses? To make money. What three ways can businesses make money? • Sell product Problem – Americans had less money to spend • Sell stock Problem – Americans weren’t buying stock • Borrow from the banks Problem – Banks were in trouble With this situation, what options do you have to keep from going out of business? • Lower wages • Lay off workers

9. The Downward Spiral/Domino Effect • Stock market crashed which ruined many investors • Without money from investors, businesses could no longer grow and expand • With banks in trouble, business could not get capital • Businesses cut back on production • Production cutbacks led to wage cuts and employee layoffs • Unemployed workers had little or no money to spend therefore bought less • Demand for goods fell • Businesses laid off more workers or went bankrupt

11. Steps of the AHPPA • Step 1 – Define the Problem • Step 2 – Gather Evidence • Step 3– Determine the Causes • Step 4 – Evaluate the Policy In your own words, describe the causes of the Great Depression.

12. A Bank Run. Photograph. garybrandastrology.com. 22 March 2011. <http://garybrandastrology.com/images/Bank_run.gif&imgrefurl> Arkansas_children. Photograph. docstoc.com. 14 March 2011 <http://www.docstoc.com/docs/3546983/Causes-of-The-Great-Depression> Bank Run. Videoclip. history.com. 14 March 2011 <Bank Run Media — History.com> Causes of the Great Depression. Worksheet. maxwell.syr.edu. 22 March 2011 < http://www2.maxwell.syr.edu/plegal/ppa/worksheet3us.html> Depression Causes. Chart. mrberlin.com. 16 March 2011 <http://mrberlin.com/images/products/detail/Depression_causes_thumb.1.png&imgerfurl> Doris Car Showroom. Photograph. landmarks-stl.org. 22 March 2011 <http://www.landmarks-stl.org/images/uploads/architects/Wees/doriscarslarge.jpg&imgrefurl> Stock Market Crash. Newspaper. mitchellarchives.com. 16 March 2011 <http://mitchellarchives.com/the-great-stock-market-crash-of-1929.htm&usg>