I believe the real GDP will be decrease in this case because even though people spend on other products/services, the real productions/services will not increase, unless we have information to state otherwise. In fact, I always believe the only way to increase read GDP is to increase productivity. Spending based on current productive is more like money transfer only.
Doubt on a simple problem from Mankiw's Macroeconomics?
I've just started studying Macroeconomics and I have a quick doubt about the following problem from Mankiw's Macroeconomics 7th edition, page 81:> 8. Consider how each of the following events is likely to affect real GDP. Do you think the change in real GDP reflects a similar change in> economic well-being?> > a) A hurricane in Florida forces Disney World to shut down for a> month.According to the solution manual, the answer is that "real GDP falls because Disney does not produce any services while it is closed". However, I wonder if it's not possible that real GDP remains constant in that scenario, for instance, if people decides to spend whatever they were going to spend at Disney on other goods and services? Then, if the fall in Disney's production were fully offset by the increased production of substitutes for Disney's services, could real GDP remain unchanged? Is my reasoning correct? Thanks.
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