Essay
Consider Figure 12.14 below, which shows the price of oil from January 2005-December 2010. What are the impacts of this on the macroeconomy? In particular, which macroeconomic relationship does this impact? Explain.
Figure 12.14: Percent Change Oil Price 
(Source: Federal Reserve Economic Data, St. Louis Federal Reserve)
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Oil prices are a form of cost shock, 
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