A supply shock
A) is usually caused by a change in the money supply
B) is any event that causes the aggregate supply curve to shift
C) is any event caused by a change in the price level
D) is usually good news for the economy
E) always leads to an increase in the interest rate

Question

Quizplus · Accepted Answer

A supply shock refers to any event that disrupts the production or supply of goods and services in an economy, causing the aggregate supply curve to shift. This can be due to various reasons such as natural disasters, technological innovation, changes in input prices, etc. It is not necessarily caused by a change in the money supply or the price level, and it may not always lead to good news for the economy. The interest rate may or may not be affected by a supply shock, depending on the nature of the shock and its impact on inflation, output, and other macroeconomic variables.

A Supply Shock