Depression
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An economic depression is often defined as a more severe version of a recession [1]that is characterized by significant decline in gross domestic product (GDP).
At the height of the Great Depression, GDP was cut in half, from $103 billion to $55 billion. This was partly because of deflation, where prices fell 10 percent per year. During the period of the Great Depression - a period which stemmed out of the 1929 stock market crash - real output in the United States fell nearly 30 percent. During the same period, the unemployment rate rose from about 3 percent to nearly 25 percent. In addition, There were also widespread bank failures, and a rash of defaults and bankruptcies by businesses and households.[2]
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There is no precise dividing line that is generally recognized by economists to distinguish a recession from a depression, and policy makers since World War II have almost resisted describing their economic situation as a depression, preferring the softer sounding term "recession."[3]
References
- ↑ Dr. Econ: What Is The Difference Between A Recession And A Depression?. Federal Reserve Bank of San Francisco. Retrieved on September 30, 2008.
- ↑ Remarks by Governor Ben S. Bernanke: Money, Gold, and the Great Depression. Federal Reserve. Retrieved on September 30, 2008.
- ↑ Depression. Auburn University. Retrieved on September 30, 2008.
