BELLWORK
1.
2.
3.
4.
5.
6.
List three factors that contributed to economic growth in the
1920’s.
What is consumerism?
What are the pros/cons of buying on credit?
Explain Lassiez-Faire economic policies. Why would the
government support this?
THINKER: How do stocks work?
THINKER2: Do you have a savings account? Why do banks
pay interest on savings?
Buying on Credit
How do stocks work?
 Companies are made up of stocks
 Stocks (shares): small portions of the company that
can be bought and sold for a given amount of money.
 When a company does well (makes a profit), the stock
increases in value.
 When a company does poorly (loses money), the
stocks decrease in value.
 The Stock Market: the place where stocks are bought
and sold.
Current Share Prices
 AT&T: $35.17
 Visa: $211.43
 Chevron: $116.58
 McDonalds: $94.83
 Nike: $89.39
 Apple: $99.78
 Google: $575.51
 These share prices are constantly changing……why?
STOCK VOCABULARY
 Speculation - Making high risk
investments with the hope of
huge returns.
 “Have to bet big to win big”
THE CASE OF CIRCUIT CITY
 Opened in 1949 as a retailer of brand-name electronics,
computers, and entertainment systems.
 Joined the stock market in 1984 – fairly successful
 2003: eliminated commission sales, 4000 employees laid off
 As of 2005, Circuit City held $1 billion in investments
 2007: Management Turnover, 3500 more jobs lost
 2008: CEO resigned, closed 155 stores, laid off 17% of workers
 11/10/08: filed for Bankruptcy, $2.32 billion in debt
 1/16/09: announced they were closing all stores
•Roller coaster
notes!
•Coincides with
page 182 in
your HOA
textbook
Discuss: What contributed to
economic growth in the 1920’s?
BELLWORK 10/7
 What was the problem with large investors
buying a huge portion of stock? What could go
wrong?
 What is the purpose of the Federal Reserve
Bank? Why did it fail in the year prior to the
Stock Market Crash?
 List three factors leading to the Crash that
showed signs of economic trouble ahead.
Signs of an “unsound economy”
 Uneven Prosperity
Tax cuts to wealthy
 Rich get richer & poor get poorer
 Personal Debt
 Luxury items seem affordable with credit
 Not everyone could pay it off
 Playing the Stock Market
 Speculation: high risk investments for a big return
 Buying on margin: bought portion of stock & borrowed the rest
 High interest rates
 Overproduction
 Originally high demand, but now, too much product
 Companies lost a lot of product and money

All these factors combined
until October 29, 1929
when. . . . . .
THE STOCK MARKET
CRASHED!!!!
BLACK TUESDAY
 Inflated stock prices began to fall at a rapid
rate.
 16.4 million shares were immediately sold
 Sold at much lower prices than for what they
were bought= huge financial losses for sellers.
 Sends economy into a downfall.
 http://www.youtube.com/watch?v=RJpLMvgUXe8
Make a prediction……..
Now that the STOCK MARKET has
crashed…
Think about what effects this event might
have on:
 People buying goods
 People producing goods
 Employment
IMMEDIATE RESULTS
#1 - Massive selling of
stocks
All sold for low prices.
Many investors lost tons of
money.
IMMEDIATE EFFECTS
#2- Lack of BuyingPeople begin to worry about
their money.
Stop buying manufactured
goods- try to hold onto what
money they have left.
IMMEDIATE EFFECTS
#3- Lack of productionSince people stopped buying
goods, companies stop
producing goods.
Economy is at a stand-still.
IMMEDIATE EFFECTS
#4 UnemploymentSince people are not buying goods,
people have to stop making goods
Workers begin to lose their jobs.
Many workers have no income.
In 1929, America’s population
was 120 million, but only 4
million held stocks. If this was
such a small number, how and
why did EVERYONE become
affected by the Great Crash?
Ripple Effect of the Crash

1.
2.
3.
4.
The Great Crash spread to the rest of Americans through the
combination of 4 factors:
Risky loans hurt banks: business and consumer borrowing
Cuts in production: output of goods dropped, no longer
affordable
Rise in unemployment: at height, 25%
Bank runs: fearful that banks would run out of money, people
rushed to make withdrawals from their accounts. This
eventually wiped out people’s savings and created bank
failures.
http://www.youtube.com/watch?v=EOzMdEwYmDU
BELLWORK
1. Even days before Black Tuesday, the stock market
seemed stable, so what went wrong? Why did the
Stock Market crash?
2. In six words or less, explain how the Great Crash
impacted Americans who didn’t own stock.
3. What is a bank run? Why did this happen?
4. THINKER: Could this have been avoided? List two
things that might have prevented the stock market
from crashing.
These results of the Great Crash
triggered the most severe
economic downturn in history.
The Great Depression: lasted
from 1929 until the U.S. entered
WWII in 1941.
Impact on Farmers and Workers
As production fell and unemployment
increased, factories began to close.
Ford shut down his Detroit factories – 75,000
people were laid off.
Farm prices began to fall – In 1929 wheat was
$1.18, in 1932 it was $0.49.
12 million unemployed (1/4 of labor force)
GNP: 1929 - $103 billion; 1933 - $56 billion
Discussion
 If the Great Depression started in the
U.S., how did this become a global
economic depression?
Impact on the World
 Countries in the Americas and Europe depended on
the U.S. markets for goods, investments and loans.
 Global economic system crumbled.
 U.S. couldn’t invest in European/American goods 
Stop providing loans  German banks failed 
suspended reparation payments  Allies stopped
paying debts  Industrial production fell = FAILURE
OF GLOBAL ECONOMY!
Reading: Failures of Hoover and the
Federal Reserve
 For the rest of class and homework, read
page 187 and finish the rest of the gold
worksheet.
CLOSURE
What factors lead to an unsound economy?
What four factors involved all Americans in the
Great Depression?
Out of those four, which do YOU feel had the
biggest effect on America’s economy?
Explain!
How did America’s depression send the world
into a global economic crisis?