A favourable supply shock occurs when:
A)environmental protection laws raise costs of production.
B)the Bank of Canada increases the money supply.
C)unions push wages up.
D)an oil cartel breaks up and oil prices fall.

Question

Quizplus · Accepted Answer

A favourable supply shock occurs when there is a sudden increase in supply, leading to lower prices and increased output. The breakup of an oil cartel and the subsequent fall in oil prices is an example of such a shock.

A Favourable Supply Shock Occurs When