This question is incomplete, here´s the complete question.
What two developments of the 1920s are considered underlying causes of the 1930s depression?
a) Red Scare and Bonus Army
b) recession and trade deficit
c) overproduction and excessive speculation
d) union strikes and wage-price spiral
Answer: c) overproduction and excessive speculation.
Explanation:
Throughout the 1920s, banks engaged in speculation buying, using investors' funds to buy stocks.
When consumer spending started to decline in the spring of 1929, manufacturers faced strong overproduction that led to an excess of goods and a slowdown in production.
However, stock prices kept rising until the stock market reached its peak and then it started crashed. By then, people rushing to withdraw their funds from the banks found they could not be repayed.
