If unemployment and inflation move inversely, then we can infer that business fluctuations are

Question

Quizplus · Accepted Answer

Business fluctuations that result in changes in unemployment and inflation are typically caused by shifts in aggregate demand, hence coming from the demand side. In the short-run, shifts in demand can result in changes in both output and prices. As the unemployment rate moves inversely with inflation, this supports the idea that changes in demand affect both.

If Unemployment and Inflation Move Inversely, Then We Can Infer