Economic Shock

What is an 'Economic Shock'

An economic shock is an event that produces a significant change within an economy, despite occurring outside of it. Economic shocks are unpredictable and typically impact supply or demand throughout the markets.

BREAKING DOWN 'Economic Shock'

An economic shock may come in a variety of forms. A shock in the supply of staple commodities, such as oil, can cause prices to skyrocket, making it expensive to use for business purposes. The rapid devaluation of a currency would produce a shock for the import/export industry because a nation would have difficulty bringing in foreign products.

RELATED TERMS
  1. Supply Shock

    An unexpected event that changes the supply of a product or commodity, ...
  2. Demand Shock

    A sudden surprise event that temporarily increases or decreases ...
  3. Statement Shock

    The shock associated with opening an investment statement and ...
  4. Shock Therapy

    A sudden and dramatic change in national economic policy that ...
  5. Reverse Culture Shock

    The shock suffered by some people when they return home after ...
  6. Shock Absorber

    A temporary restriction placed on the trading of index futures ...
Related Articles
  1. Retirement

    The Bright Side Of The Credit Crisis

    Find out how this tough economic period can be a learning experience for all.
  2. Markets

    The Importance of Commodity Pricing in Understanding Inflation

    Commodity prices are believed to be a leading indicator of inflation, but does it always hold?
  3. Markets

    Do Deflationary Shocks Help Or Hurt The Economy?

    Find out how deflationary shocks can both benefit and hurt consumers and businesses.
  4. Personal Finance

    Best Solutions For An Unexpected Tax Bill

    Finding out you owe when you expected a refund is a nasty shock. Find out how to cope with the bad news.
  5. Markets

    Introduction To Supply And Demand

    Find out all about supply and demand and how it relates to your daily purchases.
  6. Markets

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  7. Markets

    Macroeconomics: Supply, Demand and Elasticity

    By Stephen Simpson DemandDemand is driven by utility – the pleasure or satisfaction that a consumer obtains from consuming a good or service. Total utility is a function of the quantities ...
  8. Markets

    Crude Oil Peaks and Troughs Over the Past Century

    An overview of the events surrounding major price tops and bottoms in crude oil over the past 100 years.
  9. Trading

    4 Factors That Shape Market Trends

    Trends allow traders and investors to capture profits. Find out what's behind them.
  10. Markets

    Explaining Aggregate Supply

    Aggregate supply is the total supply of goods and services an economy produces in a given time period.
RELATED FAQS
  1. Why do supply shocks occur and who do they negatively affect the most?

    Take a deeper look at the nature of supply shocks, an economic phenomenon that dramatically changes the equilibrium level ... Read Answer >>
  2. What are common examples of aggregate demand shocks?

    Learn about some common examples of demand shocks in the economy, how they occur and function, and what it means to aggregate ... Read Answer >>
  3. How long does the average demand shock affect pricing?

    Read about the nature of demand shocks in an economy, how they correlate with prices, and what determines the length and ... Read Answer >>
  4. What are some common examples of demand shock?

    Discover some common examples of demand shock. Demand shocks lead to rapid increases or decreases in demand that catch everyone ... Read Answer >>
  5. What are the most common signs of impending hyperinflation?

    Learn why supply shocks in commodities such as oil and a rapidly expanding money supply are two potential signs of impending ... Read Answer >>
  6. How does a lack of demand affect financial markets?

    Discover how a lack of demand affects financial markets. A lack of demand leads to a new price equilibrium, as prices dramatically ... Read Answer >>
Hot Definitions
  1. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  2. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  3. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  4. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  5. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  6. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
Trading Center