What happens to economic activity during a period identified as "recovery"?

During a period identified as "recovery," economic activity generally experiences a reawakening following a downturn or recession. This phase is characterized by an increase in GDP as businesses begin to invest and expand, resulting in heightened economic output. The resumption of economic growth indicates that consumers are regaining confidence, leading to increased spending and investment.

As economic growth resumes, employment levels also rise due to the demand for labor needed to support the expanding activities of businesses. Companies that had previously reduced their workforce during more difficult economic times often begin hiring again, contributing to a decline in unemployment rates.

In contrast, other choices depict scenarios that do not align with the definition of recovery. For instance, a decline in GDP and a rise in unemployment indicate a recession rather than a recovery. Similarly, stabilization at a low level or underutilization of production capacities suggest stagnant or declining economic conditions, which are not characteristic of a recovery phase.