<P> Changes in built - in inflation follow the partial - adjustment logic behind most theories of the NAIRU: </P> <Ol> <Li> Low unemployment encourages high inflation, as with the simple Phillips curve . But if unemployment stays low and inflation stays high for a long time, as in the late 1960s in the U.S., both inflationary expectations and the price / wage spiral accelerate . This shifts the short - run Phillips curve upward and rightward, so that more inflation is seen at any given unemployment rate . (This is with shift B in the diagram .) </Li> <Li> High unemployment encourages low inflation, again as with a simple Phillips curve . But if unemployment stays high and inflation stays low for a long time, as in the early 1980s in the U.S., both inflationary expectations and the price / wage spiral slow . This shifts the short - run Phillips curve downward and leftward, so that less inflation is seen at each unemployment rate . </Li> </Ol> <Li> Low unemployment encourages high inflation, as with the simple Phillips curve . But if unemployment stays low and inflation stays high for a long time, as in the late 1960s in the U.S., both inflationary expectations and the price / wage spiral accelerate . This shifts the short - run Phillips curve upward and rightward, so that more inflation is seen at any given unemployment rate . (This is with shift B in the diagram .) </Li> <Li> High unemployment encourages low inflation, again as with a simple Phillips curve . But if unemployment stays high and inflation stays low for a long time, as in the early 1980s in the U.S., both inflationary expectations and the price / wage spiral slow . This shifts the short - run Phillips curve downward and leftward, so that less inflation is seen at each unemployment rate . </Li>

What does the short run phillips curve show