Essay: Fighting the unemployment rate

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Essay: Fighting the unemployment rate

To start with, using monetary policies in which money supply is increased in the economy will never fight unemployment rate. Unemployment and inflation rates are inversely related such that increase in one leads to decrease in another.

With the federal government increasing money supply, inflation rate increases and it will be impossible to control unemployment rate. With a high unemployment rate of over 6%, people’s living standards are poor and this reduces spending, investment rates, consumption, and government spending because of less taxes or increases government borrowing. These are the major elements considered in determining the economic growth of a country and once they are low, the economic growth rate is low as well.


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