Stock Market Crash Causes Risky investing- (investing all of their savings or borrowing to invest) All of the speculation leads to rising stock prices. (Bull Market) When the prices stop increasing many people sell all at once driving down prices. (Bear Market) The creates a panic of selling and even lower prices. Effects Many businesses invest profits in stocks and lose much or all of it. A number of businesses go bankrupt creating higher unemployment. Individuals are stuck in debt and forced to sell many possessions in hopes of getting out of debt.

Bank Failures Causes Banks loan money to stock brokers. Stock brokers make risky loans to individual investors. Stock Market Crashes Stock brokers and investors can not repay loans. Effects Banks lose money on the unpaid loans. People lose confidence in the banks. Many pull their savings out of the banks which forces 1 of every 5 banks to close. Any bank that closes may cost a savings customer their entire savings amount.

Overproduction Causes Increased and Improved technology allows industries to produce more goods at lower prices. Farm technology allows for greater production of food. A lack of awareness of the supply curve. (How much needs to be produced) Effects Leads to falling prices to move the extra goods. Falling prices=Falling profits Leads to Underconsumption of products and an eventual increase in unemployment.

Underproduction Causes People were in debt from excessive borrowing. The unemployment rate was rising. Wealthy people who could afford to spend on products already had most or all of what they wanted and needed. Effects Lack of consumption of farm products forces some farms in bankruptcy. Some businesses are forced to lay off workers or close creating higher unemployment. Unemployment goes from 3% to 25%.

Tariffs Causes The US Congress tried to protect American businesses by placing tariffs on foreign goods. They hoped this would push people to buy American and create more jobs. Effects Foreign nations put tariffs on our products making it more difficult to sell them overseas. It starts a trade war that reduces worldwide trade at just the wrong time.

Interest Rates Causes Low interest allowed people to borrow money easily People borrowed too much and amassed too much debt. Some of that money was invested in risky ventures like the Stock Market Effects The higher price of loans forced people to stop borrowing. Less available money in the economy helped to slow spending and growth. It made the Depression worse.