Community Forex Questions
What is the difference between a recession and a depression?
A recession is defined as a six-month period of economic decline, whereas a depression is a longer period of economic decline. The Great Depression of the 1930s, for example, lasted the majority of the decade, whereas the Great Recession of 2007-2009 lasted only 18 months.
A recession and a depression are both economic downturns, but they differ in terms of severity, duration, and impact on various economic indicators. A recession is a relatively short-term decline in economic activity, typically lasting for a few months to a couple of years. It is characterized by a decrease in GDP, rising unemployment rates, and reduced consumer spending. Governments often implement measures to stimulate economic growth during recessions.

On the other hand, a depression is a more severe and prolonged economic downturn. It involves a significant and sustained contraction in economic activity, lasting for several years. Depressions are marked by severe declines in GDP, widespread unemployment, financial crises, and a prolonged period of economic hardship. Government intervention is usually more extensive during a depression, as policymakers strive to address systemic issues and stabilize the economy. While recessions are a normal part of the economic cycle, depressions are rarer and have more profound and lasting consequences.

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