A supply shock occurs when there is a sudden and unexpected change in the availability of goods or services in the market. This can happen due to various factors, such as natural disasters, geopolitical events, or significant changes in production costs. When supply decreases sharply, it can lead to higher prices and reduced economic activity. For example, if a major oil-producing country experiences political instability, the supply of oil may drop significantly. This can cause gasoline prices to rise, affecting transportation costs and overall inflation. Supply shocks can disrupt markets and impact consumers and businesses alike.