The task asks you to
identify three of the circumstances that contributed to the Great Depression, based on the provided reading passage.
Let’s analyze the passage and extract the key causes mentioned:
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Key Points from the Passage:
1.
Introduction of new farm machinery in the 1920s → Increased production, leading to surplus supply.
- This caused
farmers' profits to diminish because supply exceeded demand.
2.
Credit was introduced to the economy → People began taking on debt to buy expensive items (cars, appliances, radios).
- When profits declined, people couldn’t repay their debts.
3.
Stock market crash of October 1929 (Black Tuesday) → The stock market value dropped by 23% that day, and by 1933, it had fallen to only 10% of its original value.
- People were buying stocks on credit ("buying on margin"), so when prices fell, they lost money and sold stocks, causing a downward spiral.
4.
Overproduction and underconsumption → Factories produced more than consumers could afford to buy, especially as wages didn’t keep up with production.
5.
Banks failed → As people couldn’t pay back loans, banks lost money and collapsed.
6.
Government did not intervene early → There was no system in place for government action until the economy worsened.
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Three Circumstances That Contributed to the Great Depression:
1.
Overproduction due to new farm machinery
→ This led to falling prices and reduced farmer incomes, weakening rural economies.
2.
Widespread use of credit (buying on credit)
→ Consumers bought goods on credit; when income dropped, they couldn't repay, leading to defaults and economic strain.
3.
Stock market speculation and the crash of 1929
→ People invested heavily in stocks on margin (borrowed money), which created an unstable bubble. When the market crashed, wealth vanished, and panic selling followed.
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Final Answer:
1. Overproduction of farm goods due to new machinery led to falling prices and reduced farmer incomes.
2. Excessive use of credit allowed people to buy goods they couldn’t afford, leading to widespread debt and defaults.
3. Speculative investing in the stock market culminated in the 1929 crash, which destroyed wealth and triggered a financial panic.
These three factors—
overproduction, overuse of credit, and the stock market collapse—were major contributors to the Great Depression, as described in the passage.
Parent Tip: Review the logic above to help your child master the concept of reading comprehension 8th grade worksheet.
