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The sharp decline in prices in 1929, leading to the Stock Market crash, was primarily caused by rampant speculation and overvaluation of stocks during the 1920s. As investors became increasingly optimistic, they bought stocks on margin, significantly inflating prices beyond their actual worth. When confidence began to wane, and selling pressure mounted, panic ensued, leading to a dramatic sell-off and a subsequent collapse in stock prices. This event marked the beginning of the Great Depression, as it severely impacted consumer confidence and spending.

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