External shock
Definition. An external shock is an unexpected event originating outside a domestic economy that disturbs its macroeconomic performance, such as a sudden change in world prices, foreign demand, or global financial conditions. For a small and open economy like Singapore, such shocks can sharply affect output, employment, and the general price level.
Examples include a surge in world oil prices, a global recession that cuts export demand, or a supply chain disruption that raises imported costs.
This term belongs to The Singapore Economy in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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