By 1929, how many Americans owned shares?

• 1 million

• 5 million

• 10 million

• 20 million

Answer explanation

More people bought shares, hoping to 'get rich quick' through speculation. In 1920, one in twenty Americans was a shareholder, but by 1929 it was one in six.

Possible reasons for the Wall Street Crash?

• American hopes of sharing in the American Dream - unrealistic

• Unrealistic valuation of US businesses (over confidence)

• Unregulated banking system

• Panic trading

Answer explanation

Because people were buying shares on the margin, people regularly got into debt to the banks. They could only pay back the banks if share prices continued to rise.

Because so many more people wanted to buy shares, share values went up because of demand, not because the company was doing well. Share values were much higher than the company was really worth.

When was 'Black Thursday?'

• October 24th 1928

• October 29th 1928

• October 24th 1929

• October 29th 1929

How many shares were ‘traded’ on October 29th, indicating a drastic loss of confidence?

• 1.6 million

• 16 million

• 6 million

• 600,000

What is the term used to borrow money from banks in order to buy shares?

• Investing

• Speculating

• Buying on the margin

Answer explanation

During the 1920s, banks began to lend people money to speculate with. People were able to buy shares with just a 10% deposit, and pay off the debt when they had sold their shares. This was called 'buying on the margin'.

True of the stock market crash…

• Caused by loss of confidence leading to panic selling

• Was an indication the economy was overheating (companies overvalued)

• It was the MAIN cause of the USA’s depression

• It contributed to but was not the MAIN cause of the depression

True of the financial crisis by 1932..

• 5000 banks failed

• Wages fell by 60%

• 9 million US citizens lost their savings

• The stock market quickly rebounded back to health

How many people where unemployed at the height of the Great Depression?

• 1 in 3

• 1 in 4

• 1 in 5

Long term causes of the depression

• Overproduction + underconsumption

• No regulation of the banks (too much lending = too much debt)

• c.40% of the population lived on or below the poverty line

• High wages

• High share values

Features of the US depression of the 1930s

• High unemployment (20-25%)

• 50% decline in industrial output / production

• Fall in GDP by 30%

• Bankruptcy, homelessness and poverty

• Higher wages