Whats a Depression and how does it mess up the economy? And whats a Resession?

Question

and how does an economy get into a depression? and/or a resession?

Answer 1

That's a good answer by netthief! A Recession is temporary versus more sever and long term as in Depression. I believe that you can associate Recessions and Depressions with what economists call "Real Dollar" terms or values. You take certain price indexes and factor out things like inflation in order to determine how much you can buy with your money versus what you could buy at another point in time in the past. If the aggregate population cannot afford as much now as versus the other time in question and this situation last for a long time, then you have a Depression! For instance, I used to be able to buy a chocolate bar for $1.00 20 years ago but now the price has gone up to $7.50 with inflation, and the CPI index indicates that only .50 represents inflation! It now costs everyone 7 times as much (in real value) to buy a chocolate bar now compared to 20 years ago so the chocolate bar economy goes into a depression because no-one can afford chocolate bars anymore and chocolate GDP decreases into a long term Depression- not a very sweet deal!

Answer 2

A depression is when everybody is totally broke and a recession is a milder form of a depression, and when nobody has any money, this affects the economy.