your statement should be made the other way around: increase in infltion tends to decrease unemployment level.
there are two models explaining the expectation augmented philips curve.
the 1st is friedman's fooling model. assume workers have adaptive expectation, and the production function takes the form of Y=f(N), N is the amount of labour supplied. suppose there is a general increase in price level, worker will wrongly perceive this as an increase in their real wage. hence they will work longer hours.the economy will experience a temportary boom with increase in output level and reduction in unemployment rate.
the 2nd explaination is the lucas' island model. suppose the economy is consist of many individual producers, who have care only about his own product. if there is a general price increase,due to information barrier, he might be confused about nature of this increase: whether his product become more expensive or general price level has risen. to the extent that his expectation is incorrect, the economy will deviate from its natrual level of output and generate business cycles.this result shows even uner rational expectation, the augmented philips curve might still hold in short run.
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