(Answered) High inflation may not good, but why sometimes it’s necessary to maintain some level of inflation…

➤ How does moderate inflation affect unemployment and the labor market?
Moderate inflation can reduce real wage rigidity, allowing employers to adjust labor costs without cutting nominal pay. This helps avoid layoffs and lowers cyclical unemployment. Short-term trade-offs may exist between inflation and unemployment, but predictable low inflation supports stable expectations, labor mobility, and smoother adjustments in hiring and wages.