The correct statement among the options you provided is:
A depression is a particularly deep recession with high levels of unemployment.
To clarify the differences between a recession and a depression:
-
Recession: Generally defined as a significant decline in economic activity across the economy lasting longer than a few months, characterized by decreases in GDP, income, employment, manufacturing, and retail sales. Recessions are typically milder and shorter in duration.
-
Depression: A more severe and prolonged economic downturn than a recession, often lasting several years. Depressions are marked by substantial declines in economic activity, significant increases in unemployment, widespread bankruptcies, and deflation (or prolonged periods of low inflation).
While some recessions can coincide with inflation (leading to stagflation), this is not a defining characteristic of a depression. Furthermore, a recession is not characterized as an economic growth period; rather, it signifies a contraction in the economy.
In summary, depressions are severe and lengthy contractions in economic activity, while recessions are milder downturns that typically last a shorter period.
1 answer