Question

Which of the following is an example of a demand shock? Multiple Choice

a.Floods in the Midwest destroy crops.
b.Hurricane Harry knocks out oil drilling platforms in the Gulf of Mexico.
c.The federal government unexpectedly requires automobile producers to raise fuel efficiency standards.
d.Consumers become worried about job loss and buy fewer goods and services than expected.

Answer 1

Option “D” Consumers become worried about job loss and buy fewer goods and services than expected, is the correct answer.

Step-by-step explanation:

Option “D” is correct because demand shock refers to the sudden decrease or increase in demand. However, option A, B, C represents supply shock because supply shock refers to a sudden increase and decrease of supply. Thus, in option A, B, C supply is decreasing suddenly while in option D the demand is decreasing. Thus option D is correct.