Final answer:
The collapse of the stock market in 1929 was not caused by the real worth of companies holding steady; instead, it was influenced by speculation and credit-based investments. The Depression affected American businesses and people through job losses, reduced consumer spending, and bank failures. The panic from the crash, coupled with underlying economic issues, led to the Great Depression.
Step-by-step explanation:
The 1929 Stock Market Crash
1. The option that did not contribute to the collapse of the stock market in 1929 is D. The real worth of companies held steady. This is incorrect as the stock prices rose to levels that could not be explained by their assets or earnings, indicating the real worth did not hold steady but rather was inflated due to speculative investment.
2. The American people and businesses were deeply affected by the Depression. D. all of the above is correct as businesses laid off workers or closed down, families had little cash to buy goods, and people lost their savings due to bank failures, all of which compounded the economic strain during the Depression.
Factors such as investment trusts buying stock on credit, risky investments, and buying stocks on margin played prominent roles in the crash. The heavy reliance on credit, both in the stock market and in consumer behavior such as taking out multiple mortgages, made the economy incredibly vulnerable. The subsequent banking failures and economic contraction further led to widespread unemployment and financial insecurity.
Finally, the stock market crash triggered a loss of public confidence, creating a panic that contributed to a self-perpetuating market decline. This, together with broader economic issues, such as poor income distribution and questionable Federal Reserve policies, catalyzed the Great Depression.