An example of a negative supply shock is ________.

Question

Quizplus · Accepted Answer

A rapid increase in energy costs, such as a sudden spike in oil prices, would lead to higher production costs for businesses and cause a negative supply shock by reducing the availability of inputs for production. A carbon cap-and-trade program could also potentially increase production costs, but it is more of a regulatory measure than a direct supply shock. The shale gas revolution and a fall in the price of oil would actually be positive supply shocks, as they would increase the availability of energy inputs and lower production costs.

An Example of a Negative Supply Shock Is ________