Economics World Bank Questions
The main difference between a recession and a depression lies in the severity and duration of the economic downturn.
A recession is generally defined as a significant decline in economic activity that lasts for a relatively short period, typically a few months to a year. During a recession, there is a decline in GDP (Gross Domestic Product), increased unemployment rates, reduced consumer spending, and a slowdown in business activity. However, recessions are considered a normal part of the business cycle and are usually less severe than depressions.
On the other hand, a depression is a severe and prolonged economic downturn characterized by a substantial decline in economic activity, lasting for several years. Depressions are marked by a significant decrease in GDP, high unemployment rates, widespread business failures, and a general decline in consumer spending. Depressions are considered to be more severe and rare than recessions, with long-lasting negative impacts on the economy and society as a whole.