Economic Shock


DEFINITION of 'Economic Shock'

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.

  1. Devaluation

    A deliberate downward adjustment to the value of a country's ...
  2. Payment Shock

    The risk that a loan's scheduled future periodic payments may ...
  3. Supply Shock

    An unexpected event that changes the supply of a product or commodity, ...
  4. Equilibrium

    The state in which market supply and demand balance each other ...
  5. Demand Shock

    A sudden surprise event that temporarily increases or decreases ...
  6. Crowding Out Effect

    An economic theory stipulating that rises in public sector spending ...
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