Monetary Policy Linked to Unemployment Rates in Groundbreaking Study
The article discusses how to manage inflation and economic growth. It suggests that controlling the inflation rate can stabilize the economy. By adjusting taxes and spending, policymakers can influence employment levels and inflation. The expected inflation rate plays a key role in determining unemployment levels. When actual inflation is higher than expected, unemployment tends to be low, and vice versa. The natural rate of unemployment, where actual and expected inflation rates match, is seen as a stable point.