Do copied spells use the original's casting location?
The new copy of Increasing Vengeance will only make one copy of the Shock - it was never cast, much less cast from your graveyard.

This isn't particularly simple - most of the time, when a spell or ability is copied, most of its characteristics are copied along with it (costs paid, choices made, etc.) - however, in this instance, since the evaluation of whether or not an extra copy is provided on resolution of Increasing Vengeance, that information is not actually copied. If it was phrased different it might actually work - something like "if the flashback cost was paid, copy twice." But phrased the way it is, you get only a single copy.

Relevant rule:


  706.10. To copy a spell or activated ability means to put a copy of it onto the stack; a copy of a spell isn't cast and a copy of an activated ability isn't activated. A copy of a spell or ability copies both the characteristics of the spell or ability and all decisions made for it, including modes, targets, the value of X, and additional or alternative costs. (See rule 601, "Casting Spells.") Choices that are normally made on resolution are not copied. If an effect of the copy refers to objects used to pay its costs, it uses the objects used to pay the costs of the original spell or ability. A copy of a spell is owned by the player under whose control it was put on the stack. A copy of a spell or ability is controlled by the player under whose control it was put on the stack. A copy of a spell is itself a spell, even though it has no spell card associated with it. A copy of an ability is itself an ability.