What is an economic shock?
Economic shock is any unexpected event that has a drastic effect on the economic system. The term "economic shock" usually concerns events that occur outside the economic system, but still have a significant impact on the system. In some cases, however, the term is applied to a significant but unexpected events that occur in the system. Shocks tend to come either in the form of shocks for supply or require shocks; The offer of shocks are much more common. In the economic system "supply" and "demand" refer to the availability and desire for a particular good or family of goods on the market. If the delivery of a given good or service decreases significantly, its costs tend to increase and its availability tends to decrease. This combination of economic stagnation and inflation is commonly referred to as stagflation. A positive shock offer, Nana, on the other hand, usually leads to an increase in availability and price reduction. If this happens, it is not uncommon for the supply to exceed the demand, which has for the followingDEK Non -Miserable Excess goods.
On the other hand, in demand, economic shock suddenly an unexpected event and significantly changes the demand for a given good or service. The effects that have this on the economy are similar to the effects of the economic shock of the offer. When demand increases significantly, prices increase and availability tends to decrease; When the demand decreases, the price decreases and the availability remains high. Sudden drastic increase and reduction of supply or demand is referred to as positive and negative shocks of supply or demand. Shocks of supply and demand are of a temporary nature; Eventually the economy returns to some form of balance.
Economic shock can be caused by mans of different events, some caused by human activity and some simply caused by accident. Natural disasters can cause economic shocks to destroy the stocks of goods, destruction of different means of production or sudden demand for variousof construction or medical needs. The introduction of a new technology can also lead to economic shock, as the new technology can in some cases drastically increase the offer of the product. Demand shocks usually come from government activities; Increase or reduce taxes or change in monetary or fiscal policy may lead to unexpected changes in consumer demand.