JOKE:When other people lose their jobs, it's a recession. When you lose yours, it's a depression.

 The difference lies only on the effects and the lasting effect of recession and depression. The
former lasts for short period while the latter has long lasting effect.
 Economics is the science that deals with the production, distribution and consumption of goods
and services that a society produces. It affects all walks of life, be it social, political or financial
 Measured as decline of GDP in consecutive years( most of the economists define this way)
 GDP measured in terms of goods and services produced in the country
 Missed out factors: Employment rate, consumer confidence etc
 The National Bureau of Economic Research (NEBR) is an agency with the authority to declare
recession in the US. The NEBR defines economic recession as 'significant decline in the economic
activity of the country that lasts for more than a few months'.
 . If the decline in GDP is greater than 10%, an economy is said to be going through depression

While a downturn in the economy for two consecutive quarters can be classified as a recession,
economic depression is marked by a more serious and prolonged recession during which the
decrease in GDP is 10 % or higher.
 Hence, even though a country might have more than two consecutive quarters of recession, it
can't be said to have entered depression unless the decline in the GDP in all the quarters add up
to at least 10%
 Recessions are common as economies are fragile but depression s not common with the last
one being the great depression in 1930s
 Since recessions are less severe than economic depressions, countries can easily bounce out of
periods of negative growth than when they are going through an economic depression. This is
specially true for countries with diverse economies as they have other means of earning
revenue when certain sectors of the economy experience a slump.
 Both are inevitable for any economy and the key take away from them can be
1. encourage businesses to formulate innovative ideas.
2. Job openings in new sectors are created, as certain businesses unable to prosper in
normal periods of economic growth may find newer opportunities to grow

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1930 GREAT DEPRESSION

 After a decade of optimism, USA stock market suffered a huge blow on Oct 29,1929

 As stock prices plummeted with no hope of recovery, panic struck. Masses and masses
of people tried to sell their stock, but no one was buying

 Since many banks had also invested large portions of their clients' savings in the stock
market, these banks were forced to close when the stock market crashed

 Seeing a few banks close caused another panic across the country. Afraid they would
lose their own savings, people rushed to banks that were still open to withdraw their
money.

 This massive withdrawal of cash caused additional banks to close. Since there was no
way for a bank's clients to recover any of their savings once the bank had closed, those
who didn't reach the bank in time also became bankrupt.

 Businesses and industry were also affected. Having lost much of their own capital in
either the Stock Market Crash or the bank closures, many businesses started cutting
back their workers' hours or wage

 In turn, consumers began to curb their spending, refraining from purchasing such things
as luxury goods.

 lack of consumer spending caused additional businesses to cut back wages or, more
drastically, to lay off some of their workers. Some businesses couldn't stay open even
with these cuts and soon closed their doors, leaving all their workers unemployed.

 People of the United States had high hopes that President Roosevelt would be able to
solve all their woes. As soon as Roosevelt took office, he closed all the banks and only let
them reopen once they were stabilized. Next, Roosevelt began to establish programs
that became known as the New Deal.

 The major turn-around for the U.S. economy occurred after the bombing of Pearl
Harbor and the entrance of the United States into World War II. Once the U.S.
was involved in the war, both people and industry became essential to the war
effort. Weapons, artillery, ships, and airplanes were needed quickly. Men were
trained to become soldiers and the women were kept on the homefront to keep the
factories going.
 It was ultimately the entrance of the U.S. into World War II that ended the Great
Depression in the United States.