A widely accepted indicator of recession is, decline in GDP for two successive quarters . That is if the Gross Domestic Product of an economy declines continuously for six months, the economy is in recession. Although there is no widely-agreed-upon definition for a depression, generally a depression is distinguished from recession when GDP declines by more than 10 percent. Another yardstick for depression is a recession lasting 3 or more years.
Recession occurs more frequently than depression. Deciding whether the economy is in recession or depression is a matter of perspective.
Summary
1. Recession is a less severe form of economic downturn.
2. Recession occurs more frequently than depression.
3. When the GDP declines by more than 10% and lasts longer than 3 years, its called depression.
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