Podcast
Questions and Answers
The tourism ______ is influenced by both direct and indirect spending in the local economy.
The tourism ______ is influenced by both direct and indirect spending in the local economy.
multiplier
To calculate the cost-benefit ______, benefits are divided by costs.
To calculate the cost-benefit ______, benefits are divided by costs.
ratio
Direct first-round leakages can occur when portions of tourist spending leave the ______ economy.
Direct first-round leakages can occur when portions of tourist spending leave the ______ economy.
local
The theory of unbalanced growth argues that some sectors will ______ faster than others to maximize tourism effects.
The theory of unbalanced growth argues that some sectors will ______ faster than others to maximize tourism effects.
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One of the steps in cost-benefit analysis is to determine where the tourist ______ is spent.
One of the steps in cost-benefit analysis is to determine where the tourist ______ is spent.
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Tourist purchases can lead to economic ______ during periods of fluctuating demand.
Tourist purchases can lead to economic ______ during periods of fluctuating demand.
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Higher prices in tourist areas may result from increased ______ due to tourism demand.
Higher prices in tourist areas may result from increased ______ due to tourism demand.
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A significant part of the tourism ______ goes towards indirect taxes collected by governments.
A significant part of the tourism ______ goes towards indirect taxes collected by governments.
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Tourists are allowed to buy in domestic markets at the same prices as local ______.
Tourists are allowed to buy in domestic markets at the same prices as local ______.
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Tourism directly affects several sectors, including hotels, shops, restaurants, and local transport ______.
Tourism directly affects several sectors, including hotels, shops, restaurants, and local transport ______.
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Tourism brings many non-monetary benefits, such as social and cultural ______.
Tourism brings many non-monetary benefits, such as social and cultural ______.
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When travelers spend on goods and services, tourism acts as an ______ industry.
When travelers spend on goods and services, tourism acts as an ______ industry.
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Tourism provides a source of income, employment, and foreign ______.
Tourism provides a source of income, employment, and foreign ______.
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The term ______ is used to describe the economic impact derived from an external source of income.
The term ______ is used to describe the economic impact derived from an external source of income.
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Indirect or secondary effects mean that money paid by tourists to businesses are used to pay for ______.
Indirect or secondary effects mean that money paid by tourists to businesses are used to pay for ______.
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Many countries utilize tourism to increase foreign exchange earnings for ______ economic growth.
Many countries utilize tourism to increase foreign exchange earnings for ______ economic growth.
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The initial ______ made by a tourist is crucial for generating income in the local economy.
The initial ______ made by a tourist is crucial for generating income in the local economy.
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The ______ effect describes the impact of tourism spending through direct and indirect channels within the economy.
The ______ effect describes the impact of tourism spending through direct and indirect channels within the economy.
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Leakage refers to the value of goods and services that must be ______ to satisfy the needs of tourism.
Leakage refers to the value of goods and services that must be ______ to satisfy the needs of tourism.
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The size of the multiplier is affected by how strongly different sectors of the economy are ______ together.
The size of the multiplier is affected by how strongly different sectors of the economy are ______ together.
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In the tourism multiplier formula, E represents the change in ______ by the tourist.
In the tourism multiplier formula, E represents the change in ______ by the tourist.
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Income spent on imports creates a ______ from the local economy.
Income spent on imports creates a ______ from the local economy.
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Tour operators and local businesses are primary recipients of the tourist's ______.
Tour operators and local businesses are primary recipients of the tourist's ______.
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The income from the first round of transactions can be used for supplies, wages, and retained ______.
The income from the first round of transactions can be used for supplies, wages, and retained ______.
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Study Notes
Tourism Multiplier
- The tourism multiplier is a formula that helps calculate the economic impact of tourism in an area.
- It considers the direct and secondary effects of tourist expenditures on the local economy.
- The multiplier effect is illustrated by the initial expenditure of a tourist, which is received as income by businesses in the local area.
- This income is then reinvested in the local economy, leading to further rounds of spending and income generation.
- The value of goods and services imported to service tourism needs is referred to as leakage and must be subtracted from the total income generated by visitors.
- The size of the multiplier depends on the interconnectedness of the various economic sectors.
- A higher multiplier results when local sectors buy heavily from each other, leading to a smaller need for imports.
Cost-Benefit Ratio
- The cost-benefit ratio is a measure of the potential benefits of tourism development compared to the costs involved.
- To calculate this ratio, the following steps are employed:
- Determining tourist spending patterns
- Assessing the percentage of each expenditure that leaves the local economy
- Determining the multiplier effect for the area
- Applying the multiplier effect to tourist expenditures to estimate total benefits
- Calculating the cost-benefit ratio as dollars received divided by dollars spent
- Applying the cost-benefit ratios to predict income and costs for both private and public sectors.
Undesirable Economic Aspects of Tourism
- Tourism can lead to higher prices for goods and services due to increased demand and imports.
- This price increase can impact local residents, who may also have to pay more.
- Tourism can also lead to economic instability due to the discretionary nature of pleasure travel.
- Fluctuations in prices and income can impact the tourism sector.
Maximizing Tourism's Economic Effect
- Growth theories like balanced and unbalanced growth have been proposed to maximize tourism's economic impact within a destination area.
- Ensuring tourists pay the same prices as local residents in domestic markets (except for duty-free shops) helps maximize economic impact.
Tourism as an Export Industry
- Tourism acts as an export industry, generating revenue from outside sources.
- Tourist expenditures directly increase economic activity in the host area.
- The economic impact of tourism can be significant, providing income, employment, and foreign exchange.
- Direct effects of tourist expenditures are those received directly by hotels, restaurants, car rentals, tour operators, and retail shops that serve tourists.
- Indirect or secondary effects occur when businesses use the money from tourists to pay for supplies, wages, or other items used in production or service delivery.
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Description
Explore the concepts of the tourism multiplier and cost-benefit ratio to understand their significance in evaluating the economic impact of tourism. This quiz covers how tourist expenditures affect local economies and the metrics used to assess the benefits versus costs of tourism development.
