(1 n of 20} When capital prices decline, the CPI will decline, all else equal. An economy could also exhibit a Phillips Curve during a debt-deflation downward spiral. This phenomenon can be seen during two other economic crises in recent U.S. history: The Great Depression of the 1930's and the Great Recession of 2008-2010. During a debt-deflation spiral capital prices fall as bankruptcies rise and firms sell off equipment at low prices. Asset prices fall as well. Price levels such as the CPI reflect the cost of capital goods, so when capital prices decline there will be downward pressure on the price level, which could lead to deflation. Deflation increases the real value of debt, leading to more bankruptcies, lower capital prices, further deflation, and so on. With a significant number of bankruptcies and declining asset prices a banking crisis will ensue, making the crisis far worse. As more firms shut down, more workers are laid off and unemployment rises. An inverse relationship between the unemployment rate and inflation is then observed