Which is a negative supply shock?
A) a lower world price for oil.
B) a lower world price for copper.
C) a drought on the Prairies that reduces wheat production.
D) a scientific discovery that lowers costs for solar energy.
E) all of the above are negative supply shocks.

Question

Quizplus · Accepted Answer

A drought on the Prairies that reduces wheat production is a negative supply shock because it decreases the supply of wheat, which leads to an increase in its price. Options A and D are positive supply shocks because they lower the cost of production, while option B is not a supply shock at all.

Which Is a Negative Supply Shock