What Is The Effect Of Unemployment On Inflation?
There are various theories which have different views about the connection between inflation and unemployment. However, I think that the view which shows a negative relation between the two is right. According to that view, with the decrease in the unemployment rate, inflation increases. The reason is that with the decrease in unemployment, economic growth is fostered. This economic growth when approaches to full capacity then prices of the commodities are increased. If the economic growth is sustained and stabled then there is no further increase in inflation.
