Some believe a depression encompasses only the period plagued by declining economic activity.
An economic depression is a severe and prolonged downturn in economic activity. In economics, an economic depression is commonly defined as an extreme recession that lasts three or more years or which leads to a decline in real gross domestic product (GDP) of at least 10% in a given year.
Depressions are relatively less frequent than milder recessions, and tend to be accompanied by high unemployment and low inflation. For example, The U.S. economy has experienced several recessions but just a handful of major economic depressions.
In times of depression, consumer confidence and investments decrease, causing the economy to shut down.
Economic factors that characterize a depression include – substantial increases in unemployment, a drop in available credit, diminishing output and productivity, consistent negative GDP growth, bank-ruptcies, Sovereign debt defaults, reduced trade and global commerce, bear market in stocks, sustained asset price volatility and falling currency values, low to now inflation, or even deflation and increased savings rate. Economists disagree on the duration of depressions.
Some believe a depression encompasses only the period plagued by declining economic activity. Other econo-mists argue that the depression continues up until the point that most economic activity has returned to normal. A depression is a deep and long-lasting recession.
From the Book – ‘ Know Everything about Corporate Social Responsibility ‘
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