When an economy is experiencing a slow down or recession, the Fed can cut the interest rate to boost the economy. This will trigger economic growth since low costs of borrowing will stimulate borrowing and thus increase consumption and investment. The rise in consumption and investment will boost job creation and hence a decline in the unemployment rate.

Unemployment is a macroeconomics principle that seeks to explain the performance of the economy as a whole. As a principle of macroeconomics, unemployment measures the number of persons in an economy who are not employed though they are willing and ready to work.