In May 2016, a huge wildfire tore through the Fort McMurray region in Alberta. Not only did
Question:
In May 2016, a huge wildfire tore through the Fort McMurray region in Alberta. Not only did the fire cause the mandatory evacuation of about 90 000 residents, but it also resulted in a loss of $1 billion worth of output due to the shutdown of nearby oil sands facilities, and massive destruction to homes and other properties in Fort McMurray. Thankfully no lives were lost from the fire (two died in traffic accidents during the evacuation) but thousands of homes and other properties were either damaged or destroyed resulting in about $3.6 billion worth of insurance claims. Even those who weren’t directly affected by the destruction were hurt because businesses failed or contracted and jobs dried up. Using one of the principles of economy-wide interaction, explain how government intervention can help in this situation.
Step by Step Answer:
Macroeconomics
ISBN: 978-1319120054
3rd Canadian edition
Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson