Demand and Supply shocks Demand shock Is an event that affects the demand for goods and services。 Demand shocks are usually characterized by aggregate output moving in the same direction as interest rates and inflation Supply shock Is an event that influences production capacity and costs Supply shocks are usually characterized by aggregate output moving in the opposite direction as inflation and interest ratesDemand and Supply Shocks Demand shock – Is an event that affects the demand for goods and services. – Demand shocks are usually characterized by aggregate output moving in the same direction as interest rates and inflation. Supply shock – Is an event that influences production capacity and costs. – Supply shocks are usually characterized by aggregate output moving in the opposite direction as inflation and interest rates