A recession or depression happens when the demand for money is greater than the supply. When this happens, people stop spending their money. The factories don't need to make as many products to sell because no one is buying them, so people lose their jobs. Then they have even less money to spend. This leads to a long slowdown in business activity. This is called a depression.

A depression always starts with a recession. A recession doesn't always turn into a depression though. A recession is never as bad and usually lasts less than a year. A depression lasts much longer, sometimes many years, and money is much more scarce.

A depression affects children as well as adults. In a depression, many parents lose their jobs and the family has very little money, sometimes only pennies! This means there isn't enough food, clothing, and good housing for the children. Sometimes children leave school early to try and find work to help support the family.  Then the children don't get a good education. Some families need to rely on charity to survive. Often the parents are tired and cranky from worrying so much about money or maybe the father leaves home to try and find work somewhere else.

Most people hate when the economy goes into a depression but some people like it. For instance, people who still have a lot of money left can buy businesses, stocks, and property at a very low price. Then when the economy is better, they can sell it for much more money.

The Great Depression is an excellent example of a depression. It was in the 1930s and it was the longest and worst depression in the United States of America. Many banks, stores, and factories closed. Millions of people were left penniless and there were hardly any jobs left. Even if you had money in the bank you never got it back. A lot of people stopped believing in the US government and elected a new president, Franklin D. Roosevelt, because the people believed he could change things and make the depression better. The depression got better when factories increased their production to make things for the war when World War II started.

Money is a very important part of our world. When there is enough of it people live much better lives. When there is a recession or depression, children and their families have to struggle a lot harder to make a good life.

Citations

Electronic media

Mitchener, Kris James. "Great Depression." World Book Online Reference Center. 
Feb. 2004. World Book, Inc. 10 Feb. 2004. <http://www.worldbookonline.com/ar?/na/ar/co/ar234080.htm>. 

Images

Images of clock, penny, stacking coins, and sign from "Microsoft Office Online" <http://office.microsoft.com/clipart/default.aspx?cag=1> 
Images free for non-profit and personal use. 
(October-February, 2003-2004). 

|Basic World Economy | Types of Economies | Money Around the World |Free Enterprise| Supply and Demand| Depression and Recession| Coins and Minting| Paper Money| Protecting Money | Making, Saving, and Spending Money| Banking and Checking Accounts| Federal Reserve and Taxes| Counterfeiting| The Stock Market and New York Stock Exchange|