Question

Stock prices start to rise:

a. When investors begin to expect an economic recovery will soon begin
b.when the unemployment rate begins to decline following a recession.
c. when investors are confident that the economy is more than 6 months into an economic recovery.
d.when investors believe an economic recovery has already begun.

Answer 1

b.when the unemployment rate begins to decline following a recession.

Step-by-step explanation:

In a recession there is usually a general decline in economic activities and a resultant decrease in spending. When recession occurs people will have less money to spend on buying stock so prices will fall s a result of reduced demand.

If however the economy is coming out of recession, economic activities are picking up, and unemployment begins to decline. This will lead to greater economic wealth, people will have more money to spend and demand for shares will rise. This will in turn lead to rise in price of shares.