Economic CrisisA stock market is a system that allows traders to buy and sell company stocks, which are collective shares, securities and derivatives (don't worry too much about the mechanics- you don't need to know them within the context of this article). A stock market crash is defined as a very fast drop in prices of stocks listed in the stock exchange, so that most stocks (many of which are owned by traders) become nearly worthless. Simply speaking, when stock buyers buy "stocks" from a company, they give the company a certain amount of money to use for their own purposes. The price of a stock is determined by how much these traders are willing to buy them for- in other words, the higher the confidence in the company's progress, the higher its stock value will be. This is also governed by the laws of supply and demand; the more sought-after a certain share is, the higher the price of that stock.
Today, the stock market fluctuates up and down all the time. The effects of these fluctuations are relatively small. However, when the stock market plunges extremely sharply, it becomes an economic crisis. This severe economic crisis could lead to the end of our way of life as we know it. And it has happened before, in what is known as the Great Depression. Read on to find out more about this devastating disaster.
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