Period when excess aggregate supply overwhelms aggregate demand, resulting in falling prices, unemployment problems, and economic contraction.
A particularly long and/or deep recession
. While there is no technical definition of a depression, conventionally it is defined as a period featuring severe declines in productivity
and particularly high unemployment. During the Great Depression, for example, GDP
in the United States dropped 12% between 1929 and 1930 and a further 16% the following year. Likewise, unemployment rose to more than 25% nationwide and higher in some places.
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A depression is a severe and prolonged downturn in the economy. Prices fall, reducing purchasing power. There tends to be high unemployment, lower productivity, shrinking wages, and general economic pessimism.
Since the Great Depression following the stock market crash of 1929, the governments and central banks of industrialized countries have carefully monitored their economies. They adjust their economic policies to try to prevent another financial crisis of this magnitude.
depression see BUSINESS CYCLE.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson