Inflation refers to the general increase in prices of goods and services over time, which reduces the purchasing power of money. When inflation rises, consumers can buy less with the same amount of money, leading to concerns about the cost of living. Unemployment is the situation where individuals who are willing and able to work cannot find jobs. High unemployment can occur during periods of economic downturn, while low unemployment often coincides with economic growth. Both inflation and unemployment are key indicators of a country's economic health and are often analyzed together to understand economic trends.