Final answer:
The Great Depression was caused by a tangled financial system, agricultural surpluses, rampant stock speculation, shrinking consumer demand, and protectionist tariffs. These factors combined to create an economic crisis that spread globally, affecting both industrialized and developing nations.
Step-by-step explanation:
Contributing Factors to the Great Depression:
Tangled interdependent financial system: The financial system was complex and globally interconnected. Banks and investors worldwide were deeply involved in the U.S. stock market, and when the market crashed, it had a domino effect on global economies. Agricultural surpluses: Overproduction in agriculture led to falling prices, which hurt farmers' incomes, contributing to economic stress well before the stock market crash.
Stock speculation: Massive speculation had inflated stock prices beyond companies' actual value, and the use of margin buying exacerbated the bubble. When credit tightened, the inability to meet margin calls led to a rapid sell-off, bursting the bubble. Shrinking consumer demand: Overproduction of goods, paired with underconsumption due to income inequality, meant that when consumers cut back, the economy stalled.