Investigating the relationship between inflation, interest rate and unemployment amid Covid-19


Aim: The aim of the journal is to evaluate the relationship between inflation rate, interest rate and the unemployment rate during Covid-19.

Method: The study would proceed with secondary quantitative within which the data would be collected through the existing researches and annual reports. The data collection process would revolve around Covid-19 and the rise in inflation, interest and unemployment rate during this period. The data would comprise of 10 observations that would help to analyze through annual reports based on last five years. The outcome of journal would comprise of identifying the rise in uncertain activities during Covid-19 leading towards rise in complications.

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The relationship between interest rates, inflation, and unemployment for a country has been one of the most important and highly debated subjects in policy making circles of macroeconomics (Burdeken et al., 2020). Interest rate is a key policy tool of central banks of all countries which depicts the cost of borrowing, and conversely it also represents the reward of saving capital (Agenor et al., 2018). If interest rate is high, high cost of borrowing discourages the common public as well as business organizations from borrowing from private or government lenders such as banks. Alternatively, low interest rate encourages borrowing. Consequently, interest rate is also influential on supply of money and goods in a given market scenario. Although theoretically, the relationship between interest rate and inflation is majorly understood, the recent Covid-19 pandemic has thwarted the conventional relationship (Grohe et al., 2022). The multifarious devasting impact of the Covid-19 distorted markets which were already facing the issue of shrinking investment due to a short-term recession and United States-China trade war (Sheng et al., 2021). The rate of price growth over a given time period is known as inflation. Sometimes the level of inflation is expressed in general terms, such as the net price increases or the rise in the cost of living across the board.

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