Final answer:
The Great Depression began with the Stock Market Crash of 1929, fueled by a stock market bubble due to excessive margin use, insider trading, and speculative credit practices. The immediate effects included widespread economic hardship, leading to governmental policy responses such as the New Deal in the US and the rise of fascism in Europe.
Step-by-step explanation:
The Causes and Effects of the Great Depression
The Great Depression was a period of severe economic downturn that began with the Stock Market Crash of 1929 and lasted throughout the 1930s. A bubble in the stock market was created largely due to excessive use of margin for buying shares, insider trading, and a credit system that allowed for risky investments. This unsustainable growth led to a catastrophic crash when credit tightened, and people could no longer sustain the buying frenzy.
Political and economic decisions of the 1920s, including those affecting agriculture, contributed to the onset of this economic crisis. The immediate effects of the Great Depression were far-reaching, affecting both industrialized and developing nations, with a significant impact on everyday Americans, who faced unemployment, homelessness, and a lack of governmental assistance initially. The desperation of these conditions made ideologies like communism attractive, as people sought new solutions to their hardship.
In response, countries like the United States implemented policies to mitigate the effects: The New Deal aimed to provide relief and economic reform. Moreover, the economic instability and postwar treaties set the stage for political unrest and the rise of fascism in Europe in the 1920s and 1930s.