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Hurricane Harvey reportedly destroyed about 500,000 cars and trucks in Texas. Assuming that most people still need a car or truck and have insurance, there will be a surge in demand for cars and trucks in Texas in the coming months. Roughly how much of a boost to GDP growth will this increased demand for cars and trucks generate?
To answer this question, you can use the formula discussed in class for decomposing the contributions of different parts of the economy to overall GDP growth. Some other pertinent information: there were 17.6 million cars and trucks bought in the US in 2016, and the Bureau of Economic Analysis reported that the motor vehicle industry represented 0.9 percent of GDP in 2016.
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