Presentation on theme: "Warm-Up People who own stock in companies may receive cash payments based on how much profit the companies make. Name 2 companies you would invest in."— Presentation transcript:
Warm-Up People who own stock in companies may receive cash payments based on how much profit the companies make. Name 2 companies you would invest in. Homework Check 8-2 Mosaic
The Crash Chapter 8 - 2
Prior Information From Last Chapter Prosperity in the Roaring 20’s Economy What goes up must...
Prior Information From Last Chapter Prosperity in the Roaring 20’s Economy Industry Booms producing large quantities of goods & jobs Incomes Rise People buy more products and buy on credit Bull Market More people buy stocks than ever before What goes up must... Farming During WWI farms produced goods selling them to Europe
8-2 The Crash The Stock Market The Crash Causes of the Great Depression
The Stock Market 1920’s wealth was on paper not actual money in the bank. – Stocks (shares) in companies – Shares were bought and sold on the stock market Investors were buying stocks on margin – Paid 10% and borrowed the rest – Idea = stocks prices go up sell the stock with enough money left over to cover the loan Stock prices started to fall. Investors begin to sell. Sell sell
The Crash More investors saw the value of stocks fall, more sold. Stock market dropped sharply and kept dropping. October 29, “Black Tuesday” – 2-4 times as much selling as usual. The stock exchange – where stocks are bought and sold –closed for two days
The Great Depression Begins Great Depression – period of very little business activity, very high unemployment, and falling wages and prices.
Earned by 10.6 million families Earned by 5.3 million families
Over Production Farms & Factories make goods faster than people can buy them Weak Banking System Bank failures due to bad loans made to people who can’t pay them back Uneven Distribution of Wealth Big Discrepancy of Rich & Poor. No savings, can’t buy the goods the factories are making, nothing to live on or pay off debts if job is lost. Production Cuts Lead to wage cuts and laying off workers now people have less money to spend Causes of the Great Depression The stock market crash did NOT cause the Great Depression! Other nations suffering hard times and can’t buy U.S goods also hurts our economy
Left Side Plot the following information Title – Stock Prices, X axis – Years in 1 year increases Y axis – Dollars per share in 50 dollar increases – – – – – – – – –
What your graph should look like
10 minute write Imagine you had invested your life savings in the stock market. How would you have felt on October 29 th ? What would you do? Write 7 lines that includes each of the following words to explain how you feel as you watch the stock market fall. Crash, stocks, margin, stock exchange, depression, over production