In 1925 when Great Britain returned to the gold standard, it placed the pound at the prewar gold parity level and, as a result, placed the country in a period of depression.
In economics, depression is defined to be a severe and prolonged downturn in economic activity. It can also mean an extreme recession lasting three or more years or which leads to a decline in real GDP of at least 10% in a given year.
In a period of depression, investments and consumer confidence decrease, which causes the economy to shut down.
Depression differs from recession in that a recession is a normal part of the business cycle occurring for at least two quarters. On the other hand, a depression is an extreme fall in economic activity lasting for years, rather than just several quarters.
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