Question

For each of the following shocks, say whether it is a demand-side shock or a supply-side shock. a. Consumer confidence falls: (Click to select) b. Government spending increases: (Click to select) c. The price of foreign goods increases: (Click to select) d. The price of oil increases: (Click to select) e. A tornado destroys manufacturing plants(ick to select) Supply-side shock Demand-side shock

Answer 1

Consumer confidence falls and government spending increase are demand-side shocks, while an increase in the price of oil and a tornado destroying manufacturing plants are supply-side shocks.

Step-by-step explanation:

The shocks can be categorized as follows:

a. Consumer confidence falls: Demand-side shock

b. Government spending increases: Demand-side shock

c. The price of foreign goods increases: Demand-side shock

d. The price of oil increases: Supply-side shock

e. A tornado destroys manufacturing plants: Supply-side shock

Answer 2

Step-by-step explanation:

Consumer confidence falls : demand side shock ( negative )

Government spending increases : demand side shock ( positive )

Price of foreign goods increases : supply side shock ( negative )

Price of oil increases : supply side shock ( negative )

A tornado destroys manufacturing plants : supply side shock (negative )