A Supply Shock Is

question 98

Multiple Choice

A supply shock is:

• A)an expected event that can either increase or decrease long-run aggregate supply permanently.
• B)an unexpected temporary event that can either increase or decrease the supply of an individual firm.
• C)an unexpected temporary event that can either increase or decrease the short-run aggregate supply.
• D)a state of confusion that occurs during a period of hyperinflation which can lead to an increase in supply in an industry.
• E)an artificially created scarcity of a particular commodity that aims at increasing the price of the commodity.

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Definitions:

Circular-Flow Diagram

A model that illustrates the movement of goods, services, and money between households and businesses in an economy.

Factor Market

A marketplace where services of the factors of production (labor, land, capital) are bought and sold.

Product Market

The marketplace where final goods or services are offered to consumers, businesses, and the government.

Positive

In economics, referring to factual statements or analyses about how the world is, as opposed to normative statements which are about how the world ought to be.