A Depression is a severe and prolonged downturn in economic activity. In economics, a depression is commonly defined as an extreme recession that lasts three or more years or which leads to a decline in real gross domestic product (GDP).Depressions are characterized by high unemployment, high inflation, and low economic growth. They can be caused by a variety of factors, including financial crises, external shocks, and policy mistakes.Policymakers typically use monetary and fiscal policy to combat depressions. Monetary policy involves actions by the central bank to manage the money supply and interest rates. Fiscal policy involves changes in government spending and taxation.Depressions can be devastating for economies and societies. They can lead to a sharp increase in poverty and inequality. They can also cause social and political unrest.
