What is the difference between a recession and a depression?

What is the difference between a recession and a depression Introduction: The Ebb and Flow of Economies Hello everyone! Welcome to our channel. Today, we're going to explore a fundamental aspect of economics: the difference between a recession and a depression. While these terms are often used interchangeably, they have distinct meanings and implications. So, let's dive in! Defining a Recession: A Temporary Slump A recession is characterized by a significant decline in economic activity, typically lasting for a few months to a year. It's marked by a contraction in various indicators, such as GDP, industrial production, and employment. Recessions are a natural part of the economic cycle, often caused by factors like reduced consumer spending, tightening credit, or external shocks like natural disasters. Understanding a Depression: A Prolonged Downturn A depression, on the other hand, is an extreme and prolonged economic downturn. It's characterized by a severe contraction in economic activity, lasting for multiple years. Depressions are rare and have far-reaching consequences. The most infamous example is the Great Depression of the 1930s, which lasted for almost a decade and had a global impact.