A supply shock is:
A)an expected event that can either increase or decrease long-run aggregate supply permanently.
B)an unexpected temporary event that can either increase or decrease the supply of an individual firm.
C)an unexpected temporary event that can either increase or decrease the short-run aggregate supply.
D)a state of confusion that occurs during a period of hyperinflation which can lead to an increase in supply in an industry.
E)an artificially created scarcity of a particular commodity that aims at increasing the price of the commodity.

Question

Quizplus · Accepted Answer

A supply shock is an unexpected temporary event that can either increase or decrease the short-run aggregate supply. This could be due to various reasons such as natural disasters, sudden changes in technology, etc. The short-run aggregate supply curve shifts to the left or right depending on the direction of the supply shock. However, over the long run, the aggregate supply curve will return to its original position.

A Supply Shock Is