Problem
During 2007 the U.S. economy was hit by a price shock, when the price of oil increased from around $60 per barrel to around $130 by June 2008. Whereas inflation increased during fall 2007 (from around 2.5% to 4.0%), unemployment did not change significantly (it even slightly increased during 2007). Explain the relationship between inflation and unemployment during 2007 using the modern Phillips curve concept.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.