Which economic downturn is characterized by prolonged negative growth typically longer than six months?

The correct answer is characterized by a prolonged negative growth in the economy lasting longer than six months, which defines a depression. A depression is a severe and prolonged downturn in economic activity, marked by extreme declines in GDP, high unemployment rates, and significant reductions in consumer spending and investment. Historical examples, such as the Great Depression of the 1930s, illustrate the profound and lasting impacts of such an economic condition.

In contrast, a recession typically refers to a period of negative economic growth that lasts for about six months to a year, making it a less severe event compared to a depression. Stagflation, meanwhile, describes a situation where the economy experiences stagnation combined with inflation, which does not exclusively denote negative growth. Lastly, the term downturn is a broader and less defined term, simply indicating a decline in economic activity without the specific characteristics that define depressions or recessions. This nuanced understanding helps clarify why the prolonged negative growth signifies a depression rather than the other economic terms.