Consider the following statements: The major traits of depression coul

Consider the following statements:
The major traits of depression could be as given below:

  • an extremely low aggregate demand in the economy causes activities to decelerate
  • the inflation being comparatively lower
  • the employment avenues start shrinking forcing unemployment rate to grow fast

Which of the above statements are correct ?

1 and 2 only
2 and 3 only
1 and 3 only
1, 2 and 3
This question was previously asked in
UPSC SO-Steno – 2018
Statements 1, 2, and 3 are all correct descriptions of major traits of an economic depression.
An economic depression is characterized by a severe and prolonged decline in economic activity. This involves: 1. A significant drop in aggregate demand, leading to reduced spending and production (deceleration of activities). 2. Low inflation or deflation (falling prices) due to the collapse in demand and economic stagnation. 3. A sharp increase in unemployment as businesses fail and production slows down, leading to widespread job losses.
A depression is a more severe form of a recession. Key indicators include substantial declines in GDP, high unemployment rates, and often deflation.
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