Supply Shock
Definition
An unexpected change in aggregate supply. Negative shocks (oil price spikes, pandemics) raise prices and cut output; positive shocks do the reverse.
Example
The 1973 OPEC oil embargo was a textbook adverse supply shock.
An unexpected change in aggregate supply. Negative shocks (oil price spikes, pandemics) raise prices and cut output; positive shocks do the reverse.
The 1973 OPEC oil embargo was a textbook adverse supply shock.