Chapter 3.2

Economic depression

A deep recession that affects the entire economy and lasts for several years.

What is the difference between a recession and a depression?

A recession is a small dip in the economy usually lasting a few weeks to a few months and a depression is a deep crash in the economy that lasts for years.

Recovery

A rise in business activity after a recession or depression.

Why may innovation play an important role in the recovery stage of the business cycle?

It is a great way to stimulate the economy to bring it out of the recession.

prosperity

Prosperity is a peak of economic activity.

What is the stage that follows a recession or depression?

Recovery

business cycle

The rise and fall of economic activity over time is called the business cycle. There are four stages of the business cycle—prosperity, recession, depression, and recovery.

Recession

economic activity slows down.