Which of the following is an example of an adverse supply shock?
A) a nationwide drought lasting for many months
B) an outbreak of war among several of the Middle Eastern oil-producing countries
C) an influenza virus that affects 50 percent of the labor force over a two month period
D) a,b,and c
E) a and c

Question

Quizplus · Accepted Answer

An adverse supply shock is an unexpected event that decreases the supply of goods and services in the economy, resulting in higher prices and lower output. A nationwide drought (A) decreases the supply of agricultural products, an outbreak of war among several of the Middle Eastern oil-producing countries (B) decreases the supply of oil and energy, and an influenza virus that affects 50 percent of the labor force over a two-month period (C) decreases the supply of labor. Therefore, all three options (A, B, and C) are examples of adverse supply shocks.

Which of the Following Is an Example of an Adverse