Demand Shock

Demand shock means a sudden change in the desire or ability to buy goods and services. In simple terms, a demand shock happens when demand suddenly rises or falls. Demand shocks are important because they can affect sales, prices, production, jobs, and economic growth. A positive demand shock can boost growth and inflation, while a negative demand shock can slow the economy. For example, if consumers suddenly cut spending because they fear recession, that can create a negative demand shock. A demand shock is not the same as a supply shock. Demand shock comes from buyers, while supply shock comes from producers or availability.