A news article describing the views of the FOMC stated: “The central bank has also been worried that inflation currently shy of its 2%-a-year goal could become embedded in people’s expectations.”

a. What does the author mean by saying that an inflation rate can become “embedded” in workers’ and firms’ expectations? How does the inflation rate being embedded in workers’ and firms’ expectations affect their decisions about wages and prices? 

b. Why might an inflation rate that is below the Fed’s 2 percent inflation target become embedded in workers’ and firms’ expectations? Why would the Fed be worried about this outcome?