Unemployment and Inflation

Unemployment is very closely related to the business cycle. As well as experiencing fluctuations in unemployment, most countries have experienced an increase in average unemployment rates from one cycle to another. Unemployment occurs when people are actively looking for jobs but can't find one. The most common definition of unemployed people is those of working ages who are without work, but who are available for work at current wage rates.
Measurement of unemployment:
Unemployment is measured by the following formula:
Unemployment rate = unemployed/ labor force * 100
Before applying this formula its important to understand what is meant by the terms employed, unemployed and the labor force.
A person is employed if he or she spent most of the previous week working at a job--as opposed to keeping house, going to school, doing something else, et cetera.
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