Figure: Real Output Shock This figure shows how real output growth reacts to a shock of a 10% increase in the price of oil. How long does it take for the economy to return to normal?

Question

Figure: Real Output Shock  This figure shows how real output growth reacts to a shock of a 10% increase in the price of oil. How long does it take for the economy to return to normal?

Quizplus · Accepted Answer

Based on the graph, it takes approximately 2.5 years (10 quarters) for the real output to return to its original level after the shock of a 10% increase in the price of oil.

Figure: Real Output Shock This Figure Shows How Real