Poverty and the Economy

Doing nothing is not likely to worsen unemployment or inflation, but it is not likely to help either. Decreasing the money supply and increasing interest rates may decrease inflation, but increase unemployment. The same is true of decreasing government spending and increasing taxes. The Reagonomics approach involved decreasing taxes to stimulate employment, and decreasing domestic spending to reduce inflation. The Democratic counterpart of the 1990s was to increase employment through government jobs and decrease inflation through price control.