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Causes of Stock Market Crash October, 1929

Causes of Stock Market Crash October, 1929. Business Cycle Terms. Inflation: demand is higher than production = prices fall Recession: demand falls, prices drop = supply is equal to or less than demand Deflation: demand is lower than production, prices fall, productivity drops

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Causes of Stock Market Crash October, 1929

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  1. Causes of Stock Market CrashOctober, 1929

  2. Business Cycle Terms • Inflation: demand is higher than production = prices fall • Recession: demand falls, prices drop = supply is equal to or less than demand • Deflation: demand is lower than production, prices fall, productivity drops • Depression: stock market crash, banks fail, unemployment, fear

  3. Causes of Great Depression • Unequal distribution of wealth

  4. People in debt • Credit • Installment plans • Overproduction • Industry & agriculture overproduce • “on margin” (lay-away) purchasing • underconsumption

  5. False prosperity • People thought businesses were more successful than in reality

  6. Banks Fail • People rush to withdraw money • People lose $$ and savings due to poor investments • Banks call in unpaid loans, people can’t afford to pay them back

  7. FEAR

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