An example of a negative supply shock is ________.

Question

Quizplus · Accepted Answer

A rapid increase in energy costs is an example of a negative supply shock because it results in an increase in the cost of inputs for businesses, which can lead to decreased production and higher prices for consumers. Options A, C, and D are not examples of negative supply shocks. A carbon cap-and-trade program is a policy response to negative externalities from production that seeks to shift the supply curve to the left, reducing output and raising prices. A fall in the price of oil is a negative demand shock that can lead to increased output and lower prices. The shale gas revolution is an example of a positive supply shock, which increases the potential output of an economy by reducing the cost of production for businesses.

An Example of a Negative Supply Shock Is ________