Which of the following is considered a negative supply shock?
A)increasing investment in the economy causes the capital stock to rise
B)an unexpected increase in the price of natural gas
C)a decline in wages
D)an improvement in technology
E)a drop in investment spending

Question

Quizplus · Accepted Answer

An unexpected increase in the price of natural gas would increase production costs for firms and lead to a negative supply shock, causing a decrease in aggregate supply. The other options either have a positive effect on the economy (A, D) or have no significant effect on aggregate supply (C, E).

Which of the Following Is Considered a Negative Supply Shock