Depression stage of trade cycle:
During depression, the level of economic activity is extremely low. The price level is low, profit margins do not exist, firms incur losses and unemployment is high. Interests, wages and profits are all low. While all sections in the economy suffer, some suffer more than others do. For instance, the producers of agricultural goods suffer badly because the prices of agricultural goods fall the most during depression. This is due to inability of the farmers to adjust their output according to the market demand, which is low. The worst hits are the working classes that suffer heavily because of unemployment. The depression is thus, a period of great suffering, low-income and unemployment.
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