Causes of the Great Depression

Causes of the Great Depression

1. Post WWI Economic Boom

   • Business production grew faster than demand
   • Families took out loans to buy cars and home appliances
   • Overspeculation and risky investments in the stock market
     • Market loses value on Oct. 24
       • Nervous people flock to banks to withdraw money
         • Banks could not come up with the cash and fail
           • Low consumer confidence in the economy
             • Investors sell their shares
               • The Stock Market Crash of 1929
             • Consumers cut spending to save money
               • Sales fall
                 • Businesses cut production
                   • Workers are laid off
                     • Unemployment reduces demand
                       • Demand goes down further
                         • Businesses cut production further
                           • More unemployment
                             • Families cannot pay off debts
                               • The Great Depression

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