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Is it true that both employment and inflation rate are highest during boom and business peak periods of the economy. And as recession sets in both rates of employment and inflation come down.?
Yes, in addition to many other factors may affect, in turn, sometimes there is a large amount of money are hunting few of the goods offset by an increase in the price and creates gap.
Yes most of the time they are related to each other.
Economic fluctuations is natural. A growing economy will never grow like a exponential curve or lenier positive curve... it needs to take a break to sustain!
It is explained as in growing economy, buying power of people increases. Demand for buying anything (appliances to property to raw materials to oil) increases, resulting in high prices of goods. As salaries increase & cost of goods increases, anything you produce will become costly. This makes majority of the people to back off from spending as everybody cant spend what the market demands. At some point of time, bubble has to burst to bring down inflatory prices back to normal, so that majority of the market start buying again..!! It is a cycle...Some experts say, it is a8 year cycle!
As economy slows down, job growth decreases resulting in unemployment of newly graduated workmen..
In some cases like America which is matured market with annual growth rate ~2%, economy may lead to negative growth resulting to Recession. (A continuous negative growth for several quarters may be called as a Recession - there is no common understanding on this with economists themself).
With all the fluctuations, still we will be growing in long term. If you study the size of the economy of any one country for every10 years, you can notice the fabulous growth recorded!
They are related. Recessions are characterized by higher rates of unemployment and inflations. Business booms are characterized by lower rates on unemployment and inflation.
Highly related to each other .. Fluctuations mean more ups and downs in the prices and in the employment rate as well
