In$2019,$ before the$$ Covid$-19$ pandemic began affecting the U$.$S$.$ economy, Nouriel Roubini of New York University identified$$ "three negative supply shocks that could trigger a global recession by$2020."$

What is a negative supply$$ shock?

A$.$

An event that causes an unexpected change in production costs or$$ technology, shifting$$ short$-$run aggregate supply to the left

B$.$

An event that causes an unexpected change in production costs or$$ technology, shifting$$ long$-$run aggregate supply to the left

C$.$

Any event that causes consumers to unexpectedly increase their$$ consumption, shifting aggregate supply to the left

D$.$

Any event that causes firms to sell more goods than they can$$ produce, shifting aggregate supply to the left

Part $2$

How can a negative supply shock cause a$$ recession?

A$.$

A negative supply shock increases the price level and reduces$$ output, so if the economy was originally at full$$ employment, a recession may occur.

B$.$

A negative supply shock can lead to expectations that expected future incomes may$$ fall, so if firms respond by reducing$$ output, a recession may occur.

C$.$

A negative supply shock increases consumption and reduces$$ output, so if the economy was originally at full$$ employment, a recession may occur.

D$.$

Recessions are the result of aggregate demand$$ shocks, not aggregate supply shocks.