What is the correlation or relationship between inflation and unemployment?
In: 2
High inflation -> High demand for products and services -> low unemployment (You need people to produce your services and products.)
Low inflation -> Low demand for products and services -> High unemployment
Two things:
Low inflation means more people with buying power. More people buying stuff increases demand, which drives up the price of commodities and services.
More people employed means more people not looking for work. This means it’s harder to fill jobs, so employers have to pay more to get skilled workers. Higher payroll costs get passed on to consumers.
[This scene from the criminally underrated Spike Lee film 25th Hour](https://www.youtube.com/watch?v=YVHY9nIPo6s) explains the second point better than I could hope to.
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