Question

A real life example of a positive supply shock

(please talk with macroeconomics terminology )

Answer 1

--> A supply shock is an unexpected event that changes the supply of a product or commodity, resulting in a sudden change in price. These are created by any unexpected event that constrains output or disrupts the supply chain, such as natural disasters or geopolitical events.

--> A positive supply shock increases output causing prices to decrease, while a negative supply shock decreases output causing prices to increase.

--> A Positive supply shock is a sudden increase in supply that shifts the short-run aggregate supply curve (SRAS) to the right and results in lower prices and an increase in real GDP. For example, an unexpected increase in the world supply of oil leads to an increase in real GDP and falling prices for gasoline.