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top   »  economics   »  economic problems   »  supply shock

3 Examples of a Supply Shock

 , February 07, 2017
A supply shock is a sudden and dramatic change in the supply of a good. This involves either a sudden increase in supply or a sudden decrease. Both scenarios tend to have a negative impact. The following are illustrative examples.

Technological Change

An innovation dramatically increases the supply of a commodity sending prices tumbling. Heavily indebted producers of the commodity go bankrupt in large numbers resulting in a financial shock.

Supply Chain Disruption

A conflict causes disruption to the supply of essential materials, parts, components, energy and products to a nation resulting in a severe decline in economic activity and social turmoil.

Political Events

A trade war between two nations escalates and a nation stops supplying an essential component or material to apply pressure to the other side.
Overview: Supply Shock
TypeEconomic Problems
DefinitionA sudden and dramatic change in the supply of a good.
Related ConceptsEconomic Problems
Protectionism
Trade War
Economics

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