Depression is defined as a severe and prolonged recession. Declining economic activity is characterized by falling output and employment levels. Generally, when an economy continues to suffer recession for two or more quarters, it is called depression.
The level of productivity in an economy falls significantly during a depression. Both the GDP (gross domestic product) and GNP (gross national product) show a negative growth along with greater business failures and unemployment. Depressions are relatively less frequent than milder recessions, and tend to be accompanied by high unemployment and low inflation.
