An article in the Economist on the Phillips curve stated, “Most economists reckon that countries have a ‘natural’ rate of unemployment determined by the flexibility of the labor market, and that when unemployment drops below that rate inflation begins to accelerate upward.”

a. What does “the flexibility of the labor market” mean? Is the flexibility of the labor market the only determinant of the natural rate of unemployment? Briefly explain. 

b. Why would inflation accelerate when the unemployment rate drops below the natural rate of unemployment?