An introduction to the stock market crash

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An introduction to the stock market crash

Review and Test Lesson Objective The students will understand the causes of the stock market crash and how the crash helped lead to the great depression. Lesson Plan Lesson Topic: What should students be able to do at the end of this lesson? The students will understand the causes of the stock market crash and how the crash helped lead to the great depression.

Analyze — investigating through supply and demand and investigating a stock for homework. What made the stock market crash? Here's a brief summary. Capital is the tools needed to produce things of value out of raw materials. Buildings and machines are common examples of capital.

Causes of the Crash

A factory is a building with machines for making valued goods. Throughout the twentieth century, most of the capital in the United States was represented by stocks. A corporation owned capital. Ownership of the corporation in turn took the form of shares of stock. Each share of stock represented a proportionate share of the corporation.

The stocks were bought and sold on stock exchanges, of which the most important was the New York Stock Exchange located on Wall Street in Manhattan. Throughout the s a long boom took stock prices to peaks never before seen.

From to stocks more than quadrupled in value. Many investors became convinced that stocks were a sure thing and borrowed heavily to invest more money in the market. But inthe bubble burst and stocks started down an even more precipitous cliff.

An introduction to the stock market crash

This had sharp effects on the economy. Demand for goods declined because people felt poor because of their losses in the stock market. New investment could not be financed through the sale of stock, because no one would buy the new stock.

An introduction to the stock market crash

But perhaps the most important effect was chaos in the banking system as banks tried to collect on loans made to stockmarket investors whose holdings were now worth little or nothing at all. Worse, many banks had themselves invested depositors' money in the stockmarket.

What Was the Crash?

When word spread that banks' assets contained huge uncollectable loans and almost worthless stock certificates, depositors rushed to withdraw their savings. Unable to raise fresh funds from the Federal Reserve System, banks began failing by the hundreds in and By the inauguration of Franklin D.

Roosevelt as president in Marchthe banking system of the United States had largely ceased to function. Businesses could not get credit for inventory. Checks could not be used for payments because no one knew which checks were worthless and which were sound.

Roosevelt closed all the banks in the United States for three days - a "bank holiday. Eventually, confidence returned to the system and banks were able to perform their economic function again.

To prevent similar disasters, the federal government set up the Federal Deposit Insurance Corporation, which eliminated the rationale for bank "runs" - to get one's money before the bank "runs out.

Another crucial mechanism insulated commercial banks from stock market panics by banning banks from investing depositors' money in stocks. Make connections to prior learning? Ask the students to recall the stock market activity we played the day before.

Remind the students that when the market crashed some of the student owed the bank money, because they had borrowed to invest.Here's how 'circuit breakers' in the stock market work, and how these pauses are supposed to prevent the next market crash from happening. Oct 27,  · Watch video · Stock Market Crash of On October 29, , Black Tuesday hit Wall Street as investors traded some 16 million shares on the New York Stock Exchange in a single day.

Billions of dollars were. The Nasdaq Composite lost 78% of its value as it fell from to Crash Course: Intro to the Stock Market is designed to include key pieces of information relating to the stock market while cutting out unnecessary information to save you valuable time.

Introduction. Latest India Stock/Share Market News, NSE, BSE, Global Market, Sensex Nifty. Live Business News headlines on IPO, Stock/Share tips, Personal Finance, Budget, Tax, Mutual Fund, Commodity Market. A Trader’s First Book on Commodities An Introduction to the World’s Fastest Growing Market, Second Edition Carley Garner.

List of stock market crashes and bear markets - Wikipedia