A depression can be defined as _____
A) a mild reduction in total production coupled with a rising unemployment rate that lasts for several years.
B) a mild decline in total production that lasts less than six months.
C) a severe fall in stock prices that causes financial panic and lasts less than six months.
D) a severe reduction in total production coupled with high unemployment that lasts for several years.
E) a decline in government spending and taxes that lasts less than six months.

Question

Quizplus · Accepted Answer

A depression is a severe reduction in total production coupled with high unemployment that lasts for several years. It is a more severe and prolonged economic downturn than a recession or a mild decline in total production that lasts less than six months. Option A describes a recession, not a depression. Option B describes a minor drop in production that does not meet the criteria for a depression. Option C describes a financial crisis, not necessarily a depression. Option E describes a brief period of fiscal contraction, not a depression.

A Depression Can Be Defined as _____