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Supply shocks (aggregate supply)

Supply-side shocks affect short run aggregate supply and can also affect a country's long-run productive potential. Examples of supply shocks might include:

  • Steep rise in oil and gas prices or other commodities used in production
  • Political turmoil / civil unrest / major strikes
  • Supply shut-downs caused by a public health crisis
  • Natural disasters causing a sharp fall in production
  • Unexpected breakthroughs in production technology (example of favourable supply shock)

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