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 a 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 16, 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 a 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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