What Is the Difference Between a Recession and a Depression

question 33

Multiple Choice

What is the difference between a recession and a depression?

• A) They both have rising unemployment and falling output, but a depression is much more severe.
• B) They both have rising unemployment and falling output, but a recession is much more severe.
• C) A recession has rising unemployment and rising output, but a depression has the reverse.
• D) A depression has rising unemployment and rising output, but a recession has the reverse.

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Definitions:

Operating Income

Income generated from a company's regular business operations, excluding expenses such as taxes and interest charges.

Variable Costs

Expenses that vary directly with the level of production or sales, such as materials and labor.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in zero profit or loss.

Fixed Costs

Expenses that do not change in proportion to the activity of a business, such as rent, salaries, and insurance premiums, remaining constant regardless of variations in business activity.