Some economists were concerned that the financial crisis of 20072009 would lead to problems with deflation. The

Question:

Some economists were concerned that the financial crisis of 2007–2009 would lead to problems with deflation. The Federal Reserve Bank of San Francisco’s Economic Letter stated: “A popular version of the well-known Phillips curve model of inflation predicts that we are on the cusp of a deflationary spiral in which prices will fall at ever increasing rates over the next several years.”
a. How might a deflationary spiral occur in the Phillips curve model?
b. Why do you think that a deflationary spiral did not happen?