Inflation vs Unemployment
There is a very interesting relationship between unemployment and inflation. This relation is explained through Philips Curve.
This curve shows that unemployment and inflation are inversely proportional to each other. This means if Inflation goes up unemployment rate will go down and vice versa. But there is some limitation to this curve which means this curve is not valid in case of hyperinflation also there are some political factors that may cause inflation to rise. But normally, this graph is valid.
Lastly, we have understood that inflation will directly affect common people. To avoid the inflation effect people invest money in different assets by taking a risk. But in the current state, this is the only way one can beat inflation.
What is Inflation? – Definition, Causes, Examples
Have you ever thought that what you used to buy in some rupees earlier, over time you pay more money for the same thing? For example, earlier you used to buy 1 packet of biscuits for 20 rupees now you pay 25 rupees for the same. But why the price of this biscuit has increased, the quality seems to be the same and if you understand this in another way, What happened to the money that earlier it can buy biscuits for 20 but now it will be able to buy the same biscuit for 25. So to know the reason for this, we have to understand inflation.
Inflation is the prices of goods increased in the economy or how much expensive commodities have become over a certain period. It is a familiar word in economics. This inflation has put many countries in the instability stage. In 1974 United States President declared Inflation a Public Enemy.