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ii. The jobless claims in both the United States (US) and Europe have hit more than...

ii. The jobless claims in both the United States (US) and Europe have hit more than 30 million each due to Coronavirus, which is expected to rise further in the coming weeks. This implies an unprecedented slowdown in two of the world's largest economies and thus a lower consumer demand. Question: How this rise in unemployment would affect the inflation and interest rates in these regions (US and Europe)? Provide the reasons for your answer as well. Write you answer here:

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Answer #1

Due to the coronavirus, there is huge unemployment in the economy and this economy will remain standstill for a long time to come.

The government will take several monetary and fiscal measures to contain the damage of those is cutting the interest rates, as the economy moves towards the recession govt will have to cut the interest rates this will give a boost to the business as the money will be availed cheap and they can take the risk so that economy can again come back to its foot

Due to the decrease in increase rate and inflation will increase as the money becomes cheap it value gets eroded.

So with the rise in unemployemnt interest rate will come down and inflation will go up.

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