Final answer:
Economic growth in a city that is rebuilding after a hurricane is likely to be negative in the short run due to the destruction of physical capital, but positive in the long run as rebuilding efforts might upgrade the infrastructure and improve the standard of living.
Step-by-step explanation:
As a city rebuilds after a hurricane destroys most of its physical capital, we would expect growth to be characterized by a negative impact in the short run due to the immediate destruction and loss of capital. However, in the long run, typically there is a positive growth effect as the rebuilding process eventually replaces and often improves on the previous infrastructure.
The correct answer to the question would be: A) Negative in the short run and positive in the long run. Initially, the destruction from a hurricane certainly causes a contraction in economic activities, and thus growth is likely to be negative. Though reconstruction efforts may increase GDP because of the influx of investment and rebuilding activities, this does not necessarily translate into immediate economic well-being or improved standard of living. In the long run, though, the city might experience positive growth as reconstruction completes and possibly upgrades the city's infrastructure, potentially leading to a higher standard of living than before.