Question: question 3disasters andndash such as bushfires floods earthquakes terrorist attacks...
Disasters – such as bushfires, floods, earthquakes, terrorist attacks and epidemics/ pandemics – obviously have a huge impact on society and our economy.
In this article, economist Janine Dixon looks at how to measure the economic cost of Australia's summer bushfires and the effects on GDP.
“Take care when examining the economic impact of fires: GDP doesn’t tell the full story”, by economist Janine Dixon, The Conversation 17 Jan 2020
Answer the following questions based on your reading of the article.
a) What are the shortcomings of GDP as a measure of wellbeing highlighted by the article? Explain in 100 words or less (2 marks). Give some examples of how GDP does not capture the full extent of the negative impact of disasters. (2 marks).
b) Discuss the long-term repercussions of these bush fires on Australia’s productive capacity. Explain in 150 words or less using production function how these bushfires will affect some of the factors of production. (4 marks)
c) What according to the author is the main problem of aggregated measures (such as GDP, GNI, leisure adjusted GNI etc.) (1 mark). How, according to the author, economic analysis can be modified to remedy this. (1 mark)