How Inflation Would Help to Evaluate the Economy's Condition

ECO 202 Week 1 Discussion Board
Name:
Institution:
The two macroeconomic indicators I would recommend watching to assess the economy's condition over the next six months
I would recommend that policy makers use inflation and unemployment as the key indicators to determine the state of the economy over the next six months. I selected inflation and unemployment because the two macroeconomic indicators are inversely related and hence it is easier to work with the two in assessing economic performance (Latvijas Banka, 2015).
How inflation would help to evaluate the economy's condition
Inflation by definition refers to a sustained increase in the general price of goods and services in the economy. Normally when the economic gross domestic product is below the required levels, the demand for goods and services exceeds the supply of goods and services leading to an upward trend in prices (Instant Forex Trading Group, 2015). For the next six months if the prices for goods and services continue increasing at an alarming rate it would be a clear indication that the economy is underperforming. On the other hand, if the prices of goods and services remain stable or even decline it would imply that the economy is performing well (The Economist, 2015).
How unemployment would...