When the Stock Market crashed in October, 1929
a-it signaled the beginning of the collapse of the economy.
b-it didn't cause, but is generally considered the beginning of the Depression.
c-wiped out investors, brokers and corporations.
d-all the above took place
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The most nearly correct answer is choice D, "all of the above." The Stock Market Crash of 1929 had been preceded by a belief that the economy had entered a period of permanent growth. This type fallacy re-occurs from time to time, and is often disproven by disastrous results. Many people engaged in schemes designed to make them rich quickly, which resulted in rampant speculation, not only in the stock market, but also in Florida real estate. By 1927, the market was driven solely by speculation rather than corporate profits. A number of indicators that the economy was overheating were ignored, as everyone wanted to make money and get out before the fall.
Economists warned that the wild growth could not continue, but were ignored. The Stock Market wobbled in Fall of 1929 and finally crashed on September 29, 1929. The market ultimately lost 80% of its value, and investors, brokers and corporations were virtually wiped out. It was then accepted that the economy had suddenly collapsed, and business slowed. Rather than improve the situation, however, the drop caused consumers to hold out for lower prices which exacerbated the collapse. The Stock Market Crash did not cause the Depression, but it did indicate in a most forceful way that the economy had entered a period of catastrophic decline.
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