Final answer:
The expectations-augmented Phillips curve predicts a negative relationship between unanticipated inflation and cyclical unemployment, reflecting the temporary influence of unanticipated inflation on unemployment levels.
Step-by-step explanation:
According to Friedman and Phelps, the expectations-augmented Phillips curve differs from the original Phillips curve because it incorporates changes in people's inflationary expectations. This revised model predicts that there is no long-term tradeoff between inflation and unemployment, unlike the original Phillips curve which suggested a negative relationship between inflation and unemployment.
The expectations-augmented curve suggests that only unanticipated inflation can temporarily lower unemployment below its natural rate, leading to cyclical unemployment. Therefore, the correct answer to the given question is B. Unanticipated inflation and cyclical unemployment.