Over time, the Federal Reserve Board of Governors has changed its estimate of the nonaccelerating inflation rate of unemployment (NAIRU). The following are the board's NAIRU estimates for selected years.
Year ____________________ NAIRU (percent)
1970 .................................... 6.0
1980 .................................... 6.4
1990 .................................... 5.6
2000 .................................... 5.1
2008 .................................... 4.8
a. Why would the board change its estimate of the NAIRU over time?
b. Suppose that the board simply kept its estimate fixed at 5.5 percent. What would have been the consequences for monetary policy during a period when the actual NAIRU was higher? What would have been the consequences for monetary policy during a period when the actual NAIRU was lower?