A recent study into the business cycle by economists Ricardo J. Caballero and Mohammad L. Hammour found that the amount of restructuring in an economy increases during expansions and slows during recessions. The natural rate is defined as the jobless rate consistent with stable wage and price inflation. When the unemployment rate drops below its natural rate, wage pressures build and inflation takes off. It has been put forth regularly since at least 1994. Eisner's detailed economic analysis suggested that the unemployment-inflation relationship is asymmetric.
High unemployment is associated with lower inflation rates.
I daresay no. The idea that more people working and producing more goods and services debauches the currency and reduces the purchasing power of money is highly suspect. The Fed should stay the course, and let the U.S. economy keep rolling along. The surprise may be that inflation stays contained, thanks to a rapidly expanding economy. Farrell is contributing economics editor for Business Week.