In early 2015, an article in the Economist noted that it was possible that in the United States, "the NAIRU may already have been reached and inflation will start accelerating; the Fed should act soon."
a. What is the NAIRU?
b. If this evaluation of the economic situation is correct, what action should the Fed take?
c. If the Fed fails to act, what is likely to happen to the short-run Phillips curve over time? Briefly explain.