1)What is the relationship between inflation, unemployment, and monetary policy?

2)What were the cons of Nehru's economic policies?

3)What is the worst economic policy implemented by a politician?

1)The monetary policy is a type of economic policy. This policy directly regulates and influences the amount of money circulating in the economy and the interest rates prevalent in a specific period with the help of the central bank of a country. Economic policies like these are also referred to as macroeconomic policies as they have a great influence on the macro economic variables such as output, employment and inflation levels.

The relationship between inflation and unemployment has been established under the Philips curve which shows that there is an inverse relationship between inflation and unemployment.

The monetary policy can be used to affect these macro economic variables like inflation and unemployment. A contractionary monetary policy is said to control inflation by lowering the money supply in the economy which in turn discourages the consumers as well as the business operators and slows down the economic activity. Rise in inflation affecting the aggregate demand which in turn affects the employment level. The opposite happens in the case of an expansionary monetary policy.

2)Jawaharlal Nehru was first Prime Minister of independent India and ruled India from 1947 to 1964. In the Nehru era, many essential sectors were neglected while making policies. Nehru's policies gave much importance to the industrialization due to which other areas were not given much importance. The following can be cons of Nehru's economic policies:

• In the Nehru era, the education sector was highly neglected. There were no policies made that focused on primary education. No sufficient investments were made in the education sector.
• As more focus was given to the industrial sector, more industries were made. They reduced the area of agriculture to establish new industries in the economy. This reduction in the land led to the food shortage in the country which was compensated with the high imports of agricultural and food products. These imports reduced the foreign exchange reserves in the country by many folds.
• Many other sectors were also neglected, there was no infrastructure development, and modernization was also not given much importance.
• The health sector in India was in bad condition. The medical sector was majorly neglected, and very less amount of investments was made for the development of the sector.

3)Austerity: a political-economic policy

The imposition of such an economic policy that aims to reduce government budget deficits by cutting down the rates of spending that negatively affect the rate of economic growth and the rate of employment by reducing investments.

A low rate of government spending reduces tax revenues that can offset the improvement of spending cuts.

We can state that these policies generally increase the rate of unemployment in the economy as the government spending falls.

This must be the worst kind of economic policy implemented by a politician.