Question

Unprecedented bushfires impacted the Australian economy in late 2019 and early 2020. Explain: a. One economic mechanism by which bushfires has increased the Australian GDP (even if it was detrimental to well-being) (answer in 140-260 words). b. One economic mechanism by which bushfires has decreased the Australian GDP (answer in 70-130 words).

Answer 1

Unprecedented bushfires impacted the Australian economy in late 2019 and early 2020. However there are some positives brought about the recovery from disasters but also caused many negatives brought by the disaster.

economic mechanism by which bushfires has increased the Australian GDP:

Due to bushfires, demand for health services in Australia Increased even though the victims suffered respiratory problems from smoke inhalation, burns and trauma. The bushfires induced health Expenditure stimulating both GDP and GNI. The old houses were burnt down, more new houses were built. This had contributed to gdp.

economic mechanism by which bushfires has decreased the Australian GDP

The bush fire has caused loss of work . People were involved in firefighting. Many were injured. Many suffered illness, displacement and loss of life. This reduced labour supply. This directly affected production. As a result this had negative impact on gdp.

Further more, tourism, hotel industry were badly affected by the bush fire. This too had Negative impact on gdp.