Unemployment and Inflation.

Unemployment is very closely related to the business cycle. As well as experiencing fluctuations in unemployment, most countries have experienced an increase in average unemployment rates from one cycle to another. Unemployment occurs when people are actively looking for jobs but can't find one. The most common definition of unemployed people is those of working ages who are without work, but who are available for work at current wage rates. Measurement of unemployment: Unemployment is …

…be increase in price level. This in turn will affect the aggregate demand. The fall in aggregate demand will lead to a fall in GDP and lower spending, accompanied by a rise in unemployment level. So far we have only discussed the demand-pull inflation and cost-push inflation in the short run. However, the real cost of inflation can only be determined if the effects of demand-pull and cost-push inflation are studied in the long run.