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Economics
Demand Shock
A sudden big change in how much people want to buy, usually caused by a crisis or boom.
Demand shocks can be positive (sudden boom in tech during lockdowns) or negative. Central banks and governments usually respond with stimulus to cushion negative demand shocks.
It's like everyone suddenly deciding to stop buying cars or everyone rushing to buy them at the same time.
Real world: During the first COVID lockdowns in 2020 there was a huge negative demand shock — people stopped travelling, eating out, and shopping. Airlines, restaurants, and retailers were devastated.
💡 Demand shocks are fast and painful — governments try to soften them with money and support.