A permanent shock refers to a sudden and lasting change in the economy that disrupts its normal functioning. It is an unexpected event that has long-term effects on key economic variables.
Related terms
Aggregate demand: The total demand for goods and services in the economy at any given time.
Aggregate supply: The total supply of goods and services produced by all firms in an economy at different price levels.
Economic recession: A significant decline in economic activity characterized by reduced production, increased unemployment, and low consumer spending.