Economic Downturn: Understanding the Cascade from Recession to Depression

This flowchart provides a succinct representation of the domino effect that can occur in an economy starting with a recession. It illustrates how rumors of a bank collapse can lead to a rush of withdrawals by depositors, causing an actual bank collapse, followed by the loss of lending services and an increase in general risk aversion. This chain of events can potentially lead to a prolonged economic depression if not managed effectively.

Edited at 2022-10-17 05:24:43