Inflation has historically had an inverse relationship with unemployment. This means that when inflation rises, unemployment drops. Higher unemployment, on the other hand, equates to lower inflation. When more people are working, they have the power to spend, which leads to an increase in demand.
<h3>What is
Inflation?</h3>
In economics, inflation is defined as a widespread rise in the prices of goods and services in an economy. When the general price level rises, each unit of currency purchases fewer products and services; hence, inflation equates to a loss of money's purchasing power.
According to the most recent Bureau of Labor Statistics report, annual inflation was 8.6 percent in May, the highest level since 1981, as assessed by the consumer price index. Other inflation indicators have risen significantly in the last year or so, though not to the same level as the CPI.
Monetary inflation is defined as a prolonged increase in a country's money supply (or currency area).
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