Suppose there is a sudden decrease in the price of oil (a favorable supply shock). What impact will this shock have on the Phillips curve?

Select one:

a.

There will be no impact on the Phillips curve

b.

The Phillips curve will shift upward indicating higher level of inflation for a given level of employment

c.

There will be a downward movement along the Phillips curve to a lower level of inflation

d.

The Phillips curve will shift downward indicating a lower level of inflation for a given level of employment