What is a positive demand shock?
Regarding this, what is a positive supply shock?
A positive supply shock increases output causing prices to decrease due to a shift in the supply curve to the right, while a negative supply shock decreases production causing prices to rise.
Secondly, what are the consequences of a positive demand shock? A positive demand shock increases aggregate demand (AD) and a negative demand shock decreases aggregate demand. Prices of goods and services are affected in both cases. When demand for goods or services increases, its price (or price levels) increases because of a shift in the demand curve to the right.
Considering this, what is an example of a demand shock?
Demand-side shocks affect one or more of the components of aggregate demand - examples of such shocks might include: Economic downturn in a major trading partner. Unexpected tax increases or cuts to welfare benefits. Financial crisis causing bank lending /credit to fall. Bigger than expected rise in unemployment rates.
Which of the following is an example of a positive demand shock?
Examples of positive demand shocks include: Interest rate cuts. Tax cuts. Government stimulus.