Stocks and the Stock Market
What is a stock?
A share of ownership in a company.
In what year did the stock market crash?
!929
What is credit?
The ability to borrow money or buy now and pay later.
What did many people fear losing when banks began to fail?
Their savings/their money
How old was Margaret Barrett when the stock market crashed in 1929?
12 years old
Where do people buy and sell shares of companies?
The stock market.
What does overconfidence mean in the stock market?
Believing stock prices will keep rising and assuming investing is safe.
What are consumers?
People who buy goods and services for their own use
Why did people rush to withdraw money from banks?
They feared their banks would fail and wanted to get their money out.
What did Margaret's family sell to earn money during the Depression?
Eggs and blackberries, among other farm products.
How can an investor make money from owning a stock?
The stock price can increase, allowing them to sell it for a profit.
What is an asset bubble?
When an asset's price rises beyond what its underlying value can reasonably support.
Why is consumer spending important to the economy?
It creates demand, helping businesses sell products and support jobs.
Why couldn't some banks return everyone's money at once?
They did not have enough cash available to meet all the withdrawals.
How much did Raymond and Anna Marie McIntyre's family lose when their bank closed?
They lost their house.
What happens to an investor if their stock loses value?
They can lose money.
How did easy access to loans encourage risky behavior?
People could borrow money to spend or invest, even if they could not easily repay it.
How can too much debt hurt consumers when the economy slows?
They still owe money and may have less money available to spend.
What happened when banks failed and closed?
People lost savings, and families and businesses struggled financially.
What did the WPA stand for?
Works Progress Administration.
Why can an unregulated stock market be risky?
Without enough oversight and protections, risky practices and price swings can harm investors.
According to the notes, what is the main explanation for the crash?
Several problems combined, including overconfidence, easy credit, rising interest rates, and panic.
How could raising interest rates from 5% to 6% contribute to economic instability?
Borrowing becomes more expensive, which can slow spending and investment.
How did bank failures make the Great Depression worse?
Lost savings and reduced access to loans hurt spending, businesses, and jobs.
What lesson did families like the McIntyres learn from the Depression?
Family and community support, work, and education were very important.