Aggregate supply shocks are
A) the results of monetary policy actions.
B) the results of fiscal policy actions.
C) the results of structural policy actions.
D) inflation shocks or shocks to potential output.
E) abrupt changes in autonomous investment.

Question

Quizplus · Accepted Answer

Aggregate supply shocks refer to unexpected events that affect the economy's ability to produce goods and services at its potential output or level of capacity. These shocks can either increase or decrease potential output and cause a shift in the aggregate supply curve, resulting in either inflation shocks or negative shocks to potential output. These shocks are not caused by monetary, fiscal, or structural policies, autonomous investment, or other factors that affect aggregate demand.

Aggregate Supply Shocks Are