The Effect of Interest Rates on Unemployment in the U.S. Economy

Understanding monetary tools and their effects can help reduceuncertainty in the future and better anticipate economicdownturns to weaken their adverse effects. This study develops amacroeconomic model and collects data on interest rates andother variables that may affect the unemployment rate as a basisfor the analysis. A series of hypotheses and error tests will helpprovide insight into the effectiveness of the model, and to whatextent variables like interest rates influence unemployment overtime. This will help determine the effectiveness of interest ratesas a monetary policy tool and highlight which variables are mostresponsible for controlling the unemployment rate. This willultimately help to understand how monetary policy can beimplemented more effectively through the adjustment of interest rates.