What is typically a sign that an economy is recovering from a recession?

The choice indicating growth in GDP and employment levels signifies a typical sign of economic recovery from a recession. During a recession, economic activity contracts, leading to lower production and higher unemployment as businesses scale back due to reduced demand.

As the economy begins to recover, there is an uptick in consumer confidence and spending, which drives businesses to increase production. This leads to an expansion in Gross Domestic Product (GDP) as more goods and services are produced. Alongside this growth, employment levels usually rise as companies begin hiring again to meet the increased demand. Therefore, sustained growth in both GDP and employment levels is a strong indicator of an economy moving out of recession and back towards a period of expansion and stability.

The other options reflect conditions that do not align with recovery. Increased inflation rates can occur, but they are not a definitive indicator of recovery; they can be symptoms of other issues. Higher unemployment rates would indicate the economy is still struggling, while decreased consumer spending typically points towards economic contraction rather than recovery. Thus, the correct choice underscores the fundamental characteristics of recovery following a recession.