Final answer:
The 1920s stock market boom was driven by consumer goods sales, expansion of electricity, and speculative investments fueled by buying on margin. The subsequent crash and Great Depression were intensified by overvaluation, poor income distribution, and panic-driven sell-offs.
Step-by-step explanation:
The booming stock market of the 1920s was characterized by rapid growth and a speculative bubble, fueled by the widespread practice of buying on margin and the increasing projection of future growth of companies' stock values. Investors were able to buy stock with as little as 10% of the value in their own money, borrowing the rest. This led to a bull market driven by the sales of new consumer goods and the expansion of electricity. However, by the late 1920s, the stock market was driven more by speculation than by actual increases in product sales, with stock prices becoming dangerously overvalued.
Moreover, factors such as poor income distribution and an over-leveraged American public meant that there were not enough new buyers to sustain the market's growth. When the bubble burst, the effects were catastrophic, leading to the Great Depression. The stock market crash was a result of a complex interplay of economic elements, including the psychologically driven contagion effect of panic where the fear of market decline led to sell-offs that further drove down the market.