Which of the following is an example of a supply shock?
A) a surprise increase of the money supply
B) an increase in government spending
C) a sharp increase in the price of oil
D) an increase in the price level

Question

Quizplus · Accepted Answer

A supply shock is an unexpected event that disrupts the supply of goods and services in an economy, leading to an increase or decrease in their prices. A sharp increase in the price of oil, for example, can disrupt the supply of energy and cause prices of goods and services that use oil, such as transportation and heating, to increase, leading to inflation. The other choices listed do not describe a supply shock.

Which of the Following Is an Example of a Supply