You've got it. Low interest rates spur the economy by letting companies borrow cheaply to expand their business. That's supposed to combat unemployment, but at

You've got it. Low interest rates spur the economy by letting companies borrow cheaply to expand their business. That's supposed to combat unemployment, but at a cost of high inflation, since there's more money. So, conversely, you can combat inflation by raising interest rates. But that's only one cause of inflation. If your economy is unproductive, or if the costs of your supplies go up, then prices will go up regardless of what your interest rates are. That was what happened to the US (and elsewhere) in the 1970s. Oil prices skyrocketed, and that raises the price of literally everything. Fewer goods were purchased, so companies reduced staff, raising unemployment. Unemployment + inflation is called the "misery index", and it's not easily fixed just with monetary measures. The US solved that in part by government debt. The government is the "borrower of last resort". It can pump money into the economy even when interest rates are high. That will eventually cause inflation but can also break the cycle of price rises and firings. People buy stuff despite high prices, more workers are hired, and eventually the economy reaches a new equilibrium despite the higher price of supplies.