tutorial 5 multiplier effects and positive impacts
TRANSCRIPT
answeranswer
The number of times money spent by a tourist The number of times money spent by a tourist circulates through a country's economycirculates through a country's economy
answeranswer
Money spent Money spent by the touristby the tourist in return for goods in return for goods or servicesor services..
answeranswer
Money spent by the people/businesses who Money spent by the people/businesses who received direct spending from the touristreceived direct spending from the tourist..
Show the Multiplier Effect in the following shapeShow the Multiplier Effect in the following shape??
Money lost through leakage
Area becomes a more popular
tourist destination, increasing profit &
revenue for reinvestment
Creates jobs indirectly in the
hotels
A new resort hotel is set up in
Hope
Other companies are attracted to the area
More jobs are indirectly created
Taxes spent on improving
infrastructure for residents & tourist services
Workers spend their earned $ in
the local area, increasing
tax revenue.
Businesses supply services to the resort
Laundromat
Grocery Store
Caterer
Florist
Parks
Hospitals
Schools
RoadsGoing to the USA to shop for the weekend, buying a Japanese car
Food
Entertainment
more workers needed to keep up with business
Malls, Restaurants, Car Rental
Answer requiredAnswer required
The answer of this shape will be your The answer of this shape will be your assignment.assignment.
Question 5Question 5
There are many different types of multipliers
reflecting which secondary effects are included.
These types are……………………………………..?
There are five types of multiplier. There are five types of multiplier. Firstly, the income multiplierFirstly, the income multiplier is the is the number of times which an individual amount of tourist expenditure should number of times which an individual amount of tourist expenditure should
be multiplied to identify the total effect on the visited place’s economybe multiplied to identify the total effect on the visited place’s economy . .
The The second and third second and third types are types are the Sales or transaction multiplier the Sales or transaction multiplier which which measures changes in business turnover created by tourism expenditures; measures changes in business turnover created by tourism expenditures; and the and the output multiplier.output multiplier. The latter is similar to the sales multiplier but The latter is similar to the sales multiplier but
includes changes in inventory or stock levels in addition to salesincludes changes in inventory or stock levels in addition to sales . .
The The final two final two types are types are the employment multiplier the employment multiplier which measures which measures changes in economic activity caused by increases or decreases in tourism changes in economic activity caused by increases or decreases in tourism employment, and employment, and the government revenue multiplierthe government revenue multiplier. The latter measures . The latter measures the effect on government revenue of changes in tourism expenditurethe effect on government revenue of changes in tourism expenditure
Different Types of MultiplierDifferent Types of Multiplier
Q6-How to Calculate the following Q6-How to Calculate the following multipliermultiplier ? ?
The Type I sales multiplier.
The Type II sales multiplier.
income ratio multiplier.
Employment ratio multiplier.
Type III Income multiplier.
Type III Income multiplier.
Type III Employment multiplier.
Calculating multiplierCalculating multiplier
The Type I sales multiplier =
direct sales + indirect sales
direct sales.
Types of multipliersTypes of multipliers
The Type II sales multiplier1 =
direct sales + indirect sales + induced sales
direct sales.
The multipliers defined above are called ratio type multipliers as they measure the ratio of a total impact measure to the corresponding direct impact.
Types of multipliersTypes of multipliers
Comparable income and employment ratio type multipliers may be defined by replacing sales with measures of income or employment in the last equations. income ratio multiplier
direct income + indirect income + induced incomedirect income + indirect income + induced income direct incomedirect income..
Employment ratio multiplier direct employment + indirect employment + induced employment direct employment.
Types of multipliersTypes of multipliers
Another way of calculating a multiplier (generally
the preferred approach among economists) is as
a ratio of income or employment to sales.
This kind of multiplier is sometimes called a Keynesian multiplier or response coefficient.
Type III Income multiplier =
direct + indirect + induced income
direct sales
Types of multipliersTypes of multipliers
Type III Employment multiplier = direct employment employment + indirect employment employment + induced employment
direct salesdirect sales
This income (employment) multiplier produces total income (employment) impacts when multiplied by the direct sales.
answeranswer
Ratio multipliers should be used with caution.
In most cases the factory that produces the
good bought by a tourist lies outside of the
local region, creating an immediate “leakage”
in the first round of spending and therefore no
local impact from production of the good.
continuedcontinued
Before applying a multiplier to tourist spending,
one must first deduct the producer prices of all
imported goods that tourists buy (i.e. only include
the local retail margins and possibly wholesale and transportation margins if these firms lie within the region).
Generally, only 60 to 70% of tourist spending appears as final demand in a local region.