Recession and Depression.?

Question

I know what a Recession is and I know what a Depression is. But when and how long does a Recession become a Depression?

Answer 1

When hyperinflation takes over its pretty safe to call it a depression. You;ve already seen numerous coporations fall, increasing unemployment rate and ridiculous increase in prices. The government should be regulating coporations who wish to maintain their growing profits at the expense of every person. This is why a depression will happen, because the government wont regulate profits and control corporate abuse. The whole financial mess can be pinpointed to corporations, capitalism is the problem, terrible economic model, it eventually collapses no matter what.

Answer 2

In school you are taught that a recession becomes a depression when negative growth in GDP/GNP is continued for 2 consecutive quarters.

However, this is measured in dollars, the truth of the matter is this which you are not taught in school. A society well being is the true measurement.

Example: Lets says that all income of a nation is produced by the manufacturing of 100 loaves bread and selling that bread to the population of 25 people,

100 hundred loaves of bread total cost to produce is $10.00

and the bread is sold for $0.50. 100 loaves are produced and sold each day. Total income is $50.00 per day.

All 25 people are workers that produce the bread, and they are paid $1.00 per day.  

The total cost paid to the workers is $25.00

Cost of materials = $10.00

Cost of labor        =    25.00

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total cost               =  $35.00

OWNERS profits =  $15.00

The economy is 100 % employed and it GDP/GNP is $50.00 per day.

Now the owner wants more money for his share of the profits.

Therefore he raises the price of bread from $0.50 to $1.00.

And cut production by half to only 5 loaves per day.

People will not buy the bread at $1.00 because they only make $1.00.

So the owner lays of half of the workers..

What has happened is this the GDP/ GNP will remain the same and it may even show growth. But have the population is put of work and those who still have jobs do not have the money to buy all that is produced

The nation is worst off, but the dollar value, says that the nation is doing just fine.