Question Description
Can you help me understand this Economics question?
Natural disasters cause death and destruction, but there is an economic oddity about them. Because there is so much money put into rebuilding after these catastrophes there can be positive economic outcomes. Why do you think this is so? To further your answer, look up the "broken window fallacy". What is this fallacy? (NOTE: you must provide a source for where you found your information about the fallacy.) Does destruction actually improve macro measures of production? What flaws do you see with this logic?
Make sure to look up "broken window fallacy".
Explanation & Answer
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Running head; THE BROKEN WINDOW
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THE BROKEN WINDOW
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Affiliate institution
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THE BROKEN WINDOW
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During catastrophes, the property is usually destroyed, and people die, and yet the economy
is positively affected. This is because people will actively purchase materials to replace damaged
properties and even spend more on services. When the service provider gets paid, he/she gets more
money to spend. In general, the economy seems to have benefited from the catastrophe. ( Wakiaga,
2016).
The fallacy of a broken window criticizes the idea that catastrophes are su...
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