Demand Shock: In every economy, it is a type of unexpected situation that leads to change in the demand for output for shorter time. Demand may decrease or increase depending upon the type of shock. Positive Demand Shock: It is a type of shock in which aggregate demand in an economy expands. It leads to increase in the price label. Negative Demand Shock: it is a type of shock in which aggregate demand in an economy contracts. It causes price to decrease. Supply Shock: In every economy it is a type of sudden event that leads to change in the supply of output for short period of time. Supply may decrease or increase depending upon the type of shock. Positive Supply Shock: It is a type of shock in which aggregate supply in an economy expands. It causes price to increase. It is a rare phenomenon. Negative Supply Shock: It is a type of shock in which aggregate supply in an economy degrades.

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Chapter 12, Problem 6P

To determine

Concept Introduction:

Demand Shock: In every economy, it is a type of unexpected situation that leads to change in the demand for output for shorter time. Demand may decrease or increase depending upon the type of shock.

Positive Demand Shock: It is a type of shock in which aggregate demand in an economy expands. It leads to increase in the price label.

Negative Demand Shock: it is a type of shock in which aggregate demand in an economy contracts. It causes price to decrease.

Supply Shock: In every economy it is a type of sudden event that leads to change in the supply of output for short period of time. Supply may decrease or increase depending upon the type of shock.

Positive Supply Shock: It is a type of shock in which aggregate supply in an economy expands. It causes price to increase. It is a rare phenomenon.

Negative Supply Shock: It is a type of shock in which aggregate supply in an economy degrades.

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