Suppose a major hurricane hits the eastern coast of Florida and only destroys significant amounts of physical capital.All else the same,in the short run,real gross domestic product (GDP) will _________,and in the long run,real GDP will _________.

Question

Quizplus · Accepted Answer

In the short run, real GDP will decline due to the destruction of physical capital. However, in the long run, the economy will return to its steady state level, with new capital stock replacing the lost capital. Therefore, real GDP will return to its initial level.

Suppose a Major Hurricane Hits the Eastern Coast of Florida