A demand shock refers to a sudden and significant change in the aggregate demand for goods and services in an economy. It can be caused by factors such as changes in consumer confidence, government spending, or monetary policy.
Related terms
Aggregate Demand (AD): The total amount of goods and services that all sectors of an economy are willing to purchase at different price levels.
Supply Shock: A sudden change in the availability or cost of key production inputs, such as natural resources or labor, which impacts the overall supply of goods and services.
Business Cycle: The recurring pattern of expansion (economic growth) and contraction (recession) in an economy over time.