Economic Depression – Definition

An economic depression suggests a very serious recession. A period of significant falls in output and negative economic depression.

A mild recession, with a small fall in GPD (of say 1%) wouldn’t be considered a depression by economists. Though in everyday use, people may refer to the economic downturn as a depression.

  • A depression would be considered to be a deep and long lasting recession, with output falling for 12 months and falling by at least 2%.

A depression would involve:

  • Very high levels of unemployment (In Great depression, unemployment often rose to 20% or more)

Related concept

  • Deflation. This involves a fall in the general price level and is very rare. But, when prices do fall it usually causes a big fall in spending.

Further reading on depressions

 

 

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