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Highly unpredictable economic gains

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Answered by 4247sharma
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In economics, a shock is an unexpected or unpredictable event that affects an economy, either positively or negatively. Technically, it is an unpredictable change in exogenous factors — that is, factors unexplained by an economic model — which may influence endogenous economic variables.

The response of economic variables, such as production and employment, at the time of the shock and at subsequent times, is measured by an impulse response function.

A technology shock is the kind resulting from a technological development that affects productivity.

If the shock is due to constrained supply, it is termed a supply shock and usually results in price increases for a particular product. Supply shocks can be produced when accidents or disasters occur. The 2008 Western Australian gas crisis resulting from a pipeline explosion at Varanus Island is one example.

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