supply shock

(noun)

An event that suddenly changes the price of a commodity or service. It may be caused by a sudden increase or decrease in the supply of a particular good.

Related Terms

  • stagflation

Examples of supply shock in the following topics:

  • Shifting the Phillips Curve with a Supply Shock

    • Aggregate supply shocks, such as increases in the costs of resources, can cause the Phillips curve to shift.
    • Stagflation caused by a aggregate supply shock.
    • The stagflation of the 1970's was caused by a series of aggregate supply shocks.
    • In this example of a negative supply shock, aggregate supply decreases and shifts to the left.
    • Give examples of aggregate supply shock that shift the Phillips curve
  • Impacts of Policies and Events on Equilibrium

    • One type of event that can shift the equilibrium is a supply shock.
    • A negative supply shock (sudden supply decrease) will raise prices and shift the aggregate supply curve to the left.
    • A positive supply shock (an increase in supply) will lower the price of said good by shifting the aggregate supply curve to the right.
    • One extreme case of a supply shock is the 1973 Oil Crisis.
    • A supply shock shifts the aggregate supply curve.
  • Reasons for and Consequences of Shift in Aggregate Supply

    • In economics, the aggregate supply shifts and shows how much output is supplied by firms at different price levels.
    • In economics, aggregate supply is defined as the total supply of goods and services that firms in a national economy produce during a specific period of time.
    • If labor or another input suddenly becomes cheaper, there would be a supply shock such that supply curve may shift outward, causing the equilibrium price in to drop and the equilibrium quantity to increase.
    • A supply shock could be caused by changing regulations or a sudden change in the price of an input, among other reasons.
    • Explain shifts in aggregate supply and their impact on the economy
  • Introduction to Inflation

    • The reasons for inflation depend on supply and demand.
    • The reason for decreases in supply are usually related to increases in the prices of inputs.
    • One major reason for cost-push inflation are supply shocks.
    • A supply shock is an event that suddenly changes the price of a commodity or service.
    • (sudden supply decrease) will raise prices and shift the aggregate supply curve to the left.
  • Nerve and Blood Supply

    • Synovial joints consist of: two layers of articular capsule, an outer fibrous capsule of dense irregular or regular (ligaments) tissue that attaches to the periosteum and inner synovial membrane of areolar tissue; synovial fluid, which forms a thin film over the capsule to reduce friction, absorb shock, supply nutrients, and remove microbes and debris; accessory ligaments, either extracapsular or intracapsular; articular discs (menisci), which are a pad of fibrocartilage that allow different shapes to fit and maintain stability; nerves and blood supply from nearby tissue; bursae, which are saclike structures to alleviate friction; and tendon sheaths, which are tubelike bursae that wrap around tendons.
    • The articular capsule is highly innervated, but avascular (lacking blood and lymph vessels), and receives nutrition from the surrounding blood supply via either diffusion (a slow process) or by convection, a far more efficient process achieved through exercise.
    • The blood supply of a synovial joint is derived from the arteries sharing in the anastomosis around the joint .
    • It supplies the capsule, synovial membrane, and the epiphyses.
  • Shifts in investment due to shocks

    • A positive demand shock increases the demand (not the quantity demanded), while a negative demand shock decreases the demand.
    • Demand shocks may originate from tax rates, money supply, and government spending.
    • Demand shocks directly impact investment.
    • Positive demand shocks increase consumer spending.
    • Increased spending leads to higher prices and therefore higher quantity supplied, inducing firms to invest in further productive capacity such as machinery or land.
  • Changes in Supply and Shifts in the Supply Curve

    • The change in price will result in a movement along the supply curve, called a change in quantity supplied, but not a shift in the supply curve.
    • Changes in supply are due to non-price changes.
    • The supplier will supply less at each quantity level.
    • A shift in supply from S1 to S2 affects the equilibrium point, and could be caused by shocks such as changes in consumer preferences or technological improvements.
    • Distinguish between shifts in the supply curve and movement along the supply curve
  • Humans and Electric Hazards

    • The hazards from electricity can be categorized into thermal and shock hazards.
    • A shock hazard occurs when electric current passes through a person.
    • The power dissipated in the supply wires is P = I2Rw, where Rw is the resistance of the wires and I the current flowing through them.
    • This can prolong the shock indefinitely.
    • The lethality of an electric shock is dependent on several variables:
  • The Nixon Shock

    • The "Nixon Shock" ended the direct convertibility of the United States dollar to gold, otherwise known as the gold standard.
    • Because Nixon made the decision without consulting any interested foreign parties, the international community deemed the new American policies the "Nixon Shock. "
    • The U.S. was running a balance-of-payments deficit and a trade deficit, the nation's first in the 20th century. 1970 was a turning point, with the Federal Reserve's gold supply dropping from an amount equal to 55% of the dollars in circulation to an amount equal to 22%.
    • By 1971, the American money supply (the total number of dollars available in the economy) had increased by 10%.
    • President Nixon instituted a set of economic policies that created the "Nixon shock," contributing to an American recession in the 1970s.
  • Blood Flow in the Brain

    • Cerebral circulation is the movement of blood through the network of blood vessels supplying the brain, providing oxygen and nutrients.
    • Cerebral circulation refers to the movement of blood through the network of blood vessels supplying the brain.
    • Since the brain is very vulnerable to compromises in its blood supply, the cerebral circulatory system has many safeguards.
    • Key of which is the circle of Willis, a circulatory anastomosis that supplies blood to the brain and surrounding structures whilst providing redundancy in case of any interruption.
    • Medical professionals must take steps to maintain proper CBF in patients who have conditions like shock, stroke, and traumatic brain injury.
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