ECON1002: Macroeconomics for the Global Economy Week 3 Tutorial 2
Student Name: CHEN JIATING
Student Number: C3169753
Tutorial Group: B1 a. Chose one example, Explain why natural and human induced disaster (earthquake, tsunami, oil spill, floods and cyclones) often has mixed impact on GDP. I would like to choose floods. GDP is the market value of all officially recognized final goods and service produced within a country in a giving period of time. The natural disaster floods have mixed impact on GDP, floods will destroy public infrastructure, home, cars and business assets, lead to demand decrease and Government will invest more money in repairment and replacement on road or building and all of it need to spend a lots of time in rebuild the assets that damaged. But there is no affection on GDP directly. We can still have opportunity to use the time to plan new building projects and to reassess risk in term of location and resilience of home. This will reflect the price effects with the floods clearly in the short term, but the GDP still increase. The rain and flooding affected the Bowen Basin coalfields significantly, Queensland’s primary coal producing region that supplies over half of Australia’s coal exports. The majority of mines in the basin became inoperable and the majority of it was operating under restriction. The flood impact on mines varied depending on their location and flood mitigation methods and whether supporting rail lines were flooded. Many mines and most rail systems are keeping running

b. Use your example to briefly demonstrate the limitations of the current methods used to measure GDP. From previous, the problem with the GDP statistic is that natural disaster increase measured GDP. It depend on the magnitude of the damage to private and public assets, the time which these assets are rebuilt and repair, and the extent to which planned spending on unrelated projects is deferred. While the full extent of damage has determined, the rebuilding program will mostly to be focus on repairs and rebuilding of house and other business assets. Thus, the rebuilding program is likely to provide a modest boost to dwelling investment and increase GDP.