Read the article and answer the question: What happened as a result of the stock market crash of 1929? Warning signs of trouble ignored before stockmarket crash in 1929perBy History.com, adapted by Newsela staff on 08.22.19Word Count 878Level 590LPeople gather across from the New York Stock Exchange in New York City on Black Thursday, October 24, 1929. Thousands of investorslost their savings in the worst stock market crash in Wall Street history on October 29 after a five-day frenzy of heavy trading. Too muchspeculation with borrowed money had inflated market values unrealistically. Photo from APIn the spring and summer of 1929, the U.S. economy was booming. Businesses were doing great.There were plenty of jobs. Investors were making a lot of money in the stock market. The futurelooked bright. The 1920s were called the Roaring '20s because everything seemed exciting andfast.In 1929, Irving Fisher said he had confidence in the U.S. economy. Fisher was a top economist. Hebelieved businesses would keep going strong. If they did slow down, he said it would be a smallslump. Other experts, though, predicted a steeper drop. No one, though, predicted what happenedlate in October. It is remembered as the stock market crash of 1929.How The Stock Market WorksWhat is the stock market? It is a trading system. It allows people to buy and sell investments. It isa way of helping companies get money to build their business. Stock prices go up or downThis article is available at 5 reading levels at https://newsela.com. pleawendepending on whether people buy or sell the stock. Investors make money when the market goesup. They lose money if it goes down.Stock prices crashed in October 1929. The stock market fell 25 percent in just two days. Investorsd lost 90 Ppanicked. They sold their stocks at lower and lower prices. By mid-November the stock markethad lost 50 percent. It finally hit bottom in 1932. By then it had lost 90 percent.Stock Market Crash Led To The Great Depressioneser ni dana 19x160The stock market crash badly harmed the U.S. economy. Many investors lost everything. The crashadded to other economic problems the country had. It was an economic disaster known as theGreat Depression.People sometimes say, "Hindsight is 20/20." They mean it is easy to see why something wentwrong after it happens. Looking back, there were signs of trouble before the crash.Gary Richardson is an economics professor. He has studied the 1929 crash and the GreatDepression. He says most investors knew the stock market could not keep rising. However, theydid not know how it would fall or how far."Sooner Or Later A Crash Is Coming"Roger Babson was an economist in the 1920s. He could see trouble for the stock market. He saidstock prices were way too high. In 1929, he spoke at a gathering of businessmen. He saidthat "sooner or later a crash is coming which will take in the leading stocks and cause a decline ..."What would happen then? Investors were likely to panic as they lost money. They would try to selltheir stocks while they were still worth something. More selling would drive down stock pricesfurther.Fisher, the economist, brushed off such fears. On October 15, 1929, he told people that stock priceswould stay high. He was very wrong. The stock market crash began two weeks later.The Federal Reserve is the central bank of the United States. It oversees other banks. It also helpsmanage the U.S. economy. It is often referred to as the Fed.The Fed Had Concerns Before Market CrashBefore the crash, the Fed had worries about the stock market. It believed the market was rising toofast. Part of the problem was how people were investing. Some investors were borrowing money tobuy stocks. Investment brokers made these loans. Investors might pay 10 percent of a stock priceto buy the stock, for example. They had to borrow the other 90 percent. This practice is known as"buying on margin."Buying on margin is risky. It lets investors borrow money to buy stock. If all goes well, the stockprice goes up. Then it is great. Investors can pay off the loan with the money they make. But whatif share prices go down? Then investors can lose a lot of money very quickly. The broker can tellthe investor to repay the loan immediately.Buying on margin contributed to the rising stock market. People were buying stocks with moneythey didn't really have. The Fed wanted to slow or stop this practice. They believed they could cooloff the stock market.

Question

Read the article and answer the question: What happened as a result of the stock market crash of 1929? Warning signs of trouble ignored before stockmarket crash in 1929perBy History.com, adapted by Newsela staff on 08.22.19Word Count 878Level 590LPeople gather across from the New York Stock Exchange in New York City on Black Thursday, October 24, 1929. Thousands of investorslost their savings in the worst stock market crash in Wall Street history on October 29 after a five-day frenzy of heavy trading. Too muchspeculation with borrowed money had inflated market values unrealistically. Photo from APIn the spring and summer of 1929, the U.S. economy was booming. Businesses were doing great.There were plenty of jobs. Investors were making a lot of money in the stock market. The futurelooked bright. The 1920s were called the Roaring '20s because everything seemed exciting andfast.In 1929, Irving Fisher said he had confidence in the U.S. economy. Fisher was a top economist. Hebelieved businesses would keep going strong. If they did slow down, he said it would be a smallslump. Other experts, though, predicted a steeper drop. No one, though, predicted what happenedlate in October. It is remembered as the stock market crash of 1929.How The Stock Market WorksWhat is the stock market? It is a trading system. It allows people to buy and sell investments. It isa way of helping companies get money to build their business. Stock prices go up or downThis article is available at 5 reading levels at https://newsela.com. pleawendepending on whether people buy or sell the stock. Investors make money when the market goesup. They lose money if it goes down.Stock prices crashed in October 1929. The stock market fell 25 percent in just two days. Investorsd lost 90 Ppanicked. They sold their stocks at lower and lower prices. By mid-November the stock markethad lost 50 percent. It finally hit bottom in 1932. By then it had lost 90 percent.Stock Market Crash Led To The Great Depressioneser ni dana 19x160The stock market crash badly harmed the U.S. economy. Many investors lost everything. The crashadded to other economic problems the country had. It was an economic disaster known as theGreat Depression.People sometimes say, &#34;Hindsight is 20/20.&#34; They mean it is easy to see why something wentwrong after it happens. Looking back, there were signs of trouble before the crash.Gary Richardson is an economics professor. He has studied the 1929 crash and the GreatDepression. He says most investors knew the stock market could not keep rising. However, theydid not know how it would fall or how far.&#34;Sooner Or Later A Crash Is Coming&#34;Roger Babson was an economist in the 1920s. He could see trouble for the stock market. He saidstock prices were way too high. In 1929, he spoke at a gathering of businessmen. He saidthat &#34;sooner or later a crash is coming which will take in the leading stocks and cause a decline ...&#34;What would happen then? Investors were likely to panic as they lost money. They would try to selltheir stocks while they were still worth something. More selling would drive down stock pricesfurther.Fisher, the economist, brushed off such fears. On October 15, 1929, he told people that stock priceswould stay high. He was very wrong. The stock market crash began two weeks later.The Federal Reserve is the central bank of the United States. It oversees other banks. It also helpsmanage the U.S. economy. It is often referred to as the Fed.The Fed Had Concerns Before Market CrashBefore the crash, the Fed had worries about the stock market. It believed the market was rising toofast. Part of the problem was how people were investing. Some investors were borrowing money tobuy stocks. Investment brokers made these loans. Investors might pay 10 percent of a stock priceto buy the stock, for example. They had to borrow the other 90 percent. This practice is known as&#34;buying on margin.&#34;Buying on margin is risky. It lets investors borrow money to buy stock. If all goes well, the stockprice goes up. Then it is great. Investors can pay off the loan with the money they make. But whatif share prices go down? Then investors can lose a lot of money very quickly. The broker can tellthe investor to repay the loan immediately.Buying on margin contributed to the rising stock market. People were buying stocks with moneythey didn't really have. The Fed wanted to slow or stop this practice. They believed they could cooloff the stock market.

Accepted Answer

In the flourishing spring and summer of 1929, the United States experienced unprecedented economic…