MACRO UNIT 3

Question 1

concluded that tourism and hospitality provides a major opportunity for growth
to countries that are at the intermediate stage of economic development and requires more foreign
exchange earnings.

Answer 1

Organization for Economic Cooperation and Development (OECD)

Question 2

This happens when tourists spend money directly at
businesses like hotels and restaurants. This spending
directly boosts the local economy.

Answer 2

Direct Effects

Question 3

This occurs when the money earned by these
businesses is then used to pay for things like supplies
and employee wages. This creates additional
economic activity as the money continues to
circulate through the local economy.

Answer 3

Secondary Effects

Question 4

is a key concept in
understanding the economic impact of tourism. It
measures how many times the money spent by a
tourist circulates in the economy.

Answer 4

Tourism Multiplier

Question 5

is used to describe the total
effect, both direct and secondary, of an external
source of income introduced into the economy.

Answer 5

Multiplier

Question 6

This refers to the money that leaves the economy
and doesn’t contribute to further economic activity
within that area.

Answer 6

Leaks/Leakage

Question 7

Serves as an indicator showing the relationship between the relative costs and benefits of a project.
It also determines the extent or area of potential benefits, meaning that it tells you the returns you’ll
get in a project or how successful it can be.

Answer 7

Cost-Benefit Ratio

Question 8

This theory suggests that tourism and hospitality
should integrate with other industries, ensuring
that goods and services are locally produced.

Answer 8

Balanced Growth Theory

Question 9

Focuses on expanding tourism and hospitality
demand as the primary driver of economic
growth.

This theory suggests that when tourism and
hospitality are developed, other industries will
move to provide the demand for products and
services locally.

Answer 9

Unbalanced Growth Theory:

Question 10

The 3 key strategies are:

Answer 10

1. Import substitution,
2. Incentives, and
3. Foreign exchange

Question 11

This strategy involves replacing imported goods
with locally produced once by imposing quotas or
tariffs on imports and supporting local industries
through subsidies, grants, or loans.

Answer 11

Import Substitution

Question 12

Incentives are financial and regulatory benefits
designed to attract both local and foreign
investments in the tourism and hospitality
sector.

Answer 12

Incentives

Question 13

Foreign exchange strategy involves managing the
use of foreign and local currency to ensure that
foreign currency is utilized effectively within the
host country, maximizing the economic benefit.

Answer 13

Foreign Exchange