Low unemployment rates cause higher inflation.

Question

Quizplus · Accepted Answer

When unemployment rates are low, there is a higher demand for labor and wages increase. This can lead to an increase in production costs, which can cause businesses to raise prices. Additionally, with more people employed and earning income, there is more money circulating in the economy, which can lead to higher spending and increased demand for goods and services, also driving up prices. Therefore, low unemployment rates can contribute to higher inflation.

Low Unemployment Rates Cause Higher Inflation