Which of the following is considered a 'supply shock'?
A) The increasing investment in the economy causing the capital stock to rise
B) An unexpected large increase in the price of natural gas
C) A decline in wages
D) An improvement in technology

Question

Quizplus · Accepted Answer

An unexpected large increase in the price of natural gas can be considered a 'supply shock' as it affects the cost of production for many industries, leading to a reduction of supply and potentially higher prices for consumers.

The other choices do not necessarily have a direct impact on supply in the same way. A) Increasing investment in the economy and capital stock could lead to greater production potential in the long run, but it does not immediately affect the supply of goods and services. C) A decline in wages could impact the labor market and potentially lead to lower production, but it does not entail a sudden shift in the supply curve. D) An improvement in technology could increase the efficiency of production and potentially lower costs, but it does not necessarily cause a shock to supply in the same way as a sudden change in resource prices or availability.

Which of the Following Is Considered a 'Supply Shock