An unexpected and widespread technological breakthrough significantly reduces the cost for businesses to produce all types of goods and services. Assuming no other simultaneous changes in the economy, what is the most likely immediate effect on the general price level and the total quantity of output?

Analyzing an Economic Disruption

A government-mandated increase in the national minimum wage is considered a positive supply shock because it increases the income of workers.

Analyzing Contrasting Economic Events

Which of the following events represents a negative supply shock in an economy?

Analyzing the Impact of an Input Price Change

Match each economic event with its most likely classification.

A sudden, unexpected, and significant increase in the global price of a critical industrial input, such as oil, occurs. Arrange the following macroeconomic effects in the logical sequence in which they would most likely unfold.

An unforeseen event that causes a sudden increase or decrease in the availability of goods and services by directly affecting the costs of production is known as a ______ shock.

Distinguishing Economic Shocks

Greater Policy Challenge of Supply Shocks