📌 Definition:

A recession is a period of significant decline in economic activity that lasts for several months.

A depression is a much deeper and longer economic downturn.

Recessions are more common. Depressions are rare and far more severe.

📉 Signs of a recession:

• rising unemployment

• lower consumer spending

• declining business profits

• reduced investments

• slower economic growth

🌍 Example of a recession:

During the COVID-19 recession many businesses shut down and unemployment increased.

📉 What happens during a depression:

• prolonged unemployment

• major business failures

• severe poverty

• large-scale financial collapse

💡 Historical example:

The Great Depression caused massive unemployment and economic hardship worldwide.

🏦 How governments respond:

• lower interest rates

• stimulus packages

• tax relief

• job support programs

✨ Key Takeaway:

• Economic slowdowns reduce confidence.
• When people and businesses spend less, economies slow down even further.