Stock Market Crash Quiz

Name and date of the second worst day in U.S. stock market history

"Black Monday" - Oct. 28, 1929

Name and date of the day that marked the beginning of the Stock Market Crash of 1929

"Black Thursday" - Oct. 24, 1929

Name and date on which a record-breaking amount of stocks were sold, and the values of stocks were essentially worthless

"Black Tuesday" - Oct. 29, 1929

List the causes of the economic problems of the late 1920s.

1. *F*arm surplus (F) 2. *L*abor-saving machinery (L) 3. *A*ndrew Mellon tax policies (A) 4. Fordney-McCumber *T*ariff (T) 5. *B*ank loans to brokerage houses (B) 6. *U*nderconsumption (U) 7. buying on *M*argin (M) 8. *S*peculation (S) (FLAT BUMS - hey, if it works...)

Give three reasons as to why the Fordney-McCumber tariff was ultimately negative.

1. discouraged foreign trade; America lessened imports from other nations, so other nations would not import from America 2. reciprocity within trade was at an all time low 3. the U.S. could not get rid of surpluses through exportation/trade

What were positive results of labor-saving machinery?

1. increased worker productivity 2. increased wages of workers

How did labor-saving machinery contribute to the economic problems of the late 1920s?

1. less workers were needed to complete the same jobs, so unemployment increased 2. workers had fewer skills 3. created overproduction 4. hurt farmers the most (tractors replaced people, etc)

Underconsumption resulted from...

1. surplus/overproduction 2. labor-saving machinery

What tariff lessened foreign trade?

Fordney-McCumber tariff

What occurred on Black Tuesday?

a record-breaking amount of stocks were sold, and the values of stocks were essentially worthless

Explain how bank loans to brokerage houses changed when a buyer sold their stocks.

banks wanted the money they had loaned to the brokerage houses, and brokerage houses wanted the money their customers had yet to pay on margin

How did the government respond to farm surpluses? Give examples.

began farm programs to maintain dependable, low costs; i.e. McNary-Hulgan Farm Relief Bill, Federal Farm Board and Agricultural Marketing Act of 1929

What was another major cause of the stock market crash?

companies said they had more profits than they did in reality so that people would invest and they could improve profits; they had two sets of books, one fake one they showed to the public, and one real one they kept hidden

Buying on margin is similar to what popular practice of today?

credit card buying

What did Andrew Mellon's tax policies ultimately do?

cut taxes for everyone, including the very wealthy

What group was most harmed by the causes of the stock market crash?

farmers

How did bank loans to brokerage houses help buyers?

helped clients to buy on margin since brokerage houses were still making money even when they weren't receiving full payments from buyers

In general, were tariffs during the 20s high or low? Which political party was behind this?

high, Republicans

Why did Andrew Mellon's tax policies contribute to economic problems of the late 1920s?

hurt the revenue coming into the U.S.

What occurred on Black Thursday?

marked the beginning of the Stock Market Crash of 1929

What were bank loans to brokerage houses?

money given from banks to the companies that were licensed to buy and sell stocks/securities

What is a dividend?

monthly interest people make due to stocks

What is buying on margin?

occurred when buyers paid part of a stock's worth upon purchase and the rest upon selling it

What was the main difference between Black Monday and Black Thursday? (hint: a weekend had passed)

on Black Thursday, the president, bankers, and brokers tried to convince people this was a temporary blip. by Black Monday, this optimism had vanished.

What did the Fordney-McCumber tariff do?

raised tariffs on imported goods

What was it called when people tried to get their money out of the banks before they closed down?

run on the banks

What occurred on Black Monday?

second worst day in U.S. stock market history, people no longer optimistic

Give three examples of speculation.

stocks, going to the race tracks, buying land, fantasy football, etc (any sort of gamble)

Explain farm surplus.

surpluses in products cause prices to lower (easy to get these products). farms would then switch their crops so their farms would not fail, and there would be a subsequent shortage in that initial crop. these shortages amounted to higher prices of such products, so farmers switched back to that crop, and there were surpluses. and so the cycle continued.

What is speculation?

the RISKY PROCESS of, in the case of this chapter, everyday people buying stocks and hoping to profit

What are brokerage houses? How do they make their money?

the intermediary between the buyer and seller, make money on commission

What is underconsumption?

the purchase of goods at a level lower than that of the supply

Buying on margin worked until...

the stocks were no longer worth anything and buyers still had to pay the money back

Why was the Fordney-McCumber tariff enacted?

to protect farms and factories - American industry (help U.S. industry flourish, create dependence on own products)