Which of the following is an example of an adverse supply shock?
A) a nationwide drought lasting for many months
B) an outbreak of war among several of the Middle Eastern oil-producing countries
C) an influenza virus that affects 50 percent of the labor force for two weeks
D) a, b, and c
E) a and c

Question

Quizplus · Accepted Answer

All three options of a nationwide drought, an outbreak of war among several of the Middle Eastern oil-producing countries, and an influenza virus affecting a significant portion of the labor force lead to a decrease in the supply of goods and services. As a result, the prices of these goods and services would go up, leading to inflation. Therefore, all of these events are examples of adverse supply shocks.

Which of the Following Is an Example of an Adverse