Economic Depression Definition

A depression can affect a community, a region, a nation, or the world. Economic depressions are often defined by several characteristics:

1) Massive unemployment: During a great depression, many businesses suffer a large loss of sales for their product or service. For this reason, many businesses often reduce their labour force by large amounts. Many businesses can go bankrupt during a depression, eliminating many jobs that were provided with the business.

2) Social degradation: Economic depression is often very bad for a functioning society. With large unemployment rates, many people can not get jobs. Thus, food lines, crime, prostitution, mass movements of people to various places , and other forms of social degradation are often common. Many people are forced to rely upon the government for help in these distressing times.

3)Degradation in social services: Many people use government services of one form or another during normal economic patterns. Often, during prosperous times, individuals who are not currently employed can rely upon government assistance programmes until they can find another job.

However, during economic depressions, large portions of society may become unemployed. As a result, social services provided by the government can be put under sever pressure. Also, as many more people depend upon social services for their needs, a government's ability to provide those services becomes much more difficult. This is due to a drop in tax revenues provided by now existing businesses, as well as the employees of the government. As one can see, a sever economic depression is not good for anybody.