this is very important slide share related with the economy , on the topic of shocks to supply and demand in which both with positive and negative types of shocks are discussed in detail.

2. NAME NAJEEB ULLAH
REGISTERATION NO. 3593-SE/BSECO/S20
ASSIGNMENT MACROECONOMICS
TEACHER. MR. DOCTOR BABER HUSSAIN

3. SHOCKS IN THE ECONOMY
Shocks may occure to aggregate supply as well as aggregate demand .
Supply shocks.
 there are two types of shocks .
1) Positive shocks to aggregate supply.
2) Negative shocks to aggregate supply.

4. EXAMPLES OF POSITIVE SUPPLY SHOCKS . (FAVOURABLE)
 Shocks that increases output, which causes prices to decrease due
to a shift in the supply curve to the right in the short run .
 while in the long run output and inflation remain unchanged.
 Shocks may be permanent or temporary.
positive supply shocks are
1. Decreases in oil prices.
2. Lower union pressures.
3. A great crop season.
4. Changes in health care industry.
5. Revolution in technology. ETC…..

5. EXAMPLES OF NEGATIVE SUPPLY SHOCKS. (UNFAVOURABLE)
 A negative supply shock decreases output, causing prices to
increase.
 Any natural disaster or other unanticipated event that disrupts
the production process and/or supply-chain.
 The Russia-Ukraine war fueling the 'biggest
supply shock to global grain markets' in
living memory.
 A drastic decrease in the available supply
of oil due to geopolitical tensions.
 China imposing rare earth elements export
limits against Japan.

6.  Negative supply shocks would be any natural disaster or other
unanticipated event that disrupts the production process and/or
supply-chain.
 Increase in food prices due to crops around the world.
 When wages hikes immediately.
 The COVID-19 pandemic can be seen as a supply
shock .

7. DEMAND SHOCK
there are two types of demand shocks .
1)Positive demand shocks.
2)Negative demand shocks.

8. POSITIVE DEMAND SHOCK.(FAVOURABLE)
 A positive demand shock is a sudden increase
in demand.
 Change in Price Cannot Cause a Demand Shock.
 A change in quantity demanded due to
a change in price, does not reflect a
demand shock.

9.  There can be many factors that can lead to a positive demand shock.
 Some of them include:
1) Government tax cuts.
2) Government stimulus plans.
3) Central bank rate cuts.
4) The introduction of a new technology.
5) The discovery of a previously unknown benefit of a
medicine.
 ETC…….

10. NEGATIVE DEMAND SHOCKS. (UNFAVOURABLE)
 A positive demand shock is a sudden decrease
in demand.
 At any price, the quantity demanded decreased, the entire
demand curve shifts left.

11.  There can be many factors that can lead to a negative demand
shock. Some of them include:
•Government tax increases.
•Central bank rate increases.
•The cancellation of a government infrastructure project.
•The discovery of a harmful compound in a specific cleaning
sanitizer.
•The discovery of a previously unknown side effect of a medicine.
•ETC……