9. Ination and unemployment Suppose that. in an attempt to combat severe ination. the government decides to decrease the amount of money.r in circulation in the economy. This monetary policy 7 the economy's demand for goods and servioes, Iead'rng to 7 product prices. In the short run, the change in prices induces rms to produce 7 goods and services. This, in turn, leads to a 7 level of unemployment. In other words. the economy.r faces a tradeoff between ination and unemployment: Lower ination leads to V unemployment