Great Depression Essay

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Question 1 In essence, there was rapid expansion of the United States stock market in the 1920s. This expansion was founded on credit. In late 1920s, wild speculation reached its peak, and the price of stocks went too far from their intrinsic value. This led to the 1929 Stock Market Crash. The 1930s ushered a period of the stock market contraction as a consequence of the Great Depression.

Question 2

The United States did not have its factories destroyed during WW1, unlike was the case in some European countries. It is important to note that through necessity, there was significant increase in production as well as manufacturing during the war. For this reason, and several others, the United States emerged from the WW1 stronger, with a booming economy and as an industrial leader.

Question 3

With most people having zero experience in the purchase of securities, Liberty Bonds, “Investing Culture”, Margin Buying managed to get ordinary people acquainted with the purchase of securities. They eased the speculative effort and people borrowed more and more to speculate in the Stock Market. This speculative activity founded on artificial demand pushed share prices to levels way above the actual value of the said stocks.

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There was a proposal to support a number of key stocks using pooled funds, to the tune of 250 million dollars.
Question 5

After stock prices fell, companies were left with no capital and as a result, they started to implement layoffs and shut down production facilities – eventually triggering mass bankruptcies. These events led to a fall in the demand of goods and services, bringing about a contraction in GDP.

Question 6

Some of the steps Roosevelt took on being elected were geared towards the restoration of confidence. In addition to setting up the U.S. Securities and Exchange Commission, Roosevelt elected people of integrity to oversee the transformation and also oversaw the formulation of various financial regulations.

Question 7

The impact of the Great Depression was felt far and wide. In addition to occasioning severe output declines, the Great Depression also brought about serious deflation and significant levels of unemployment. Today’s volatility of the stock market ought to be worrying. This is more so the case given the recent significant swings of the Dow. The resilience of…

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References

[FullyFundedTrader]. (2013, Jan 30). 1929 The Great Crash. – A Video about the Stock Market Crash in 1929 [Video File]. Retrieved from https://youtu.be/POMhTJqw1d4



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