Supply shock

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Macroeconomics
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A supply shock is an event that suddenly increases or decreases the

equilibrium price of the good or service or the economy's general price level

In the short run, an economy-wide negative supply shock will shift the

1973 Oil Crisis is often used as the exemplar case of a supply shock, when OPEC

restrictions on production and sale of petroleum resulted in fuel shortages throughout the developed world.

In the short run, an economy-wide positive supply shock will shift the aggregate supply curve rightward, increasing output and decreasing the price level.

technology shock

) which makes production more efficient, thus increasing output.

Technical analysis

The slope of a demand curve determines how much the price level and output respond to the shock, with more inelastic demand (and hence a steeper demand curve) causing there to be a larger effect on the price level and a smaller effect on quantity.

References

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ISBN 978-1-111-82234-7

Bibliography

Czech, Brian, Supply Shock: Economic Growth at the Crossroads and the Steady State Solution, (Gabriola Island, Canada, 2013)

Technical analysis

See also

References

Bibliography