TMC - Tourism Management Certificate Tourism Economics and Policy Questions and Answers

Question 1

A government invests $20 million to expand a regional airport to accept international flights. This initial spending leads to jobs for construction workers, who then spend their wages at local shops and restaurants. These businesses then increase orders from local farms and suppliers. This chain reaction of economic benefit is best described by what concept?

Accepted Answer

The Tourism Multiplier Effect

Answer

The tourism multiplier effect describes how initial spending by tourists or on tourism infrastructure circulates through the local economy. The money is re-spent multiple times, creating indirect and induced economic benefits that are greater than the original expenditure. [5, 17]

Question 2

A large, foreign-owned, all-inclusive resort is built in a developing country. While it creates some local jobs, it imports most of its food, uses an international management company, and repatriates its profits to its home country. This situation is a prime example of which economic phenomenon?

Accepted Answer

High economic leakage

Answer

Economic leakage occurs when revenue generated by tourism is lost from the local economy rather than recirculating within it. [2, 7, 13] This happens when foreign-owned companies repatriate profits or when goods and services (like food, materials, or specialized labor) are imported from outside the destination.

Question 3

Which of the following is the primary purpose of a government implementing a specific occupancy tax (or 'bed tax') on hotel stays?

Accepted Answer

To fund destination marketing, tourism-related infrastructure, and convention centers.

Answer

Occupancy taxes are a common form of tourism taxation where the revenue is specifically earmarked to promote tourism and the convention/hotel industry. [1, 8] This can include funding for destination marketing organizations (DMOs), maintaining convention centers, or improving public infrastructure that supports tourism.

Question 4

What internationally recognized framework allows a country to measure the direct economic contribution of tourism to its Gross Domestic Product (GDP) in a way that is comparable with other industries like agriculture or manufacturing?

Accepted Answer

The Tourism Satellite Account (TSA)

Answer

The Tourism Satellite Account (TSA) is a standard statistical framework developed by the UNWTO and other international bodies. It is the main tool for measuring the economic contribution of tourism to a national economy, consistent with the standards of the System of National Accounts (SNA), which allows for credible comparison with other sectors. [12, 21, 24, 28]

Question 5

A core function of government in tourism policy is to provide the legal and regulatory framework for the industry. Which of the following actions best illustrates this role?

Accepted Answer

Establishing zoning laws, business licensing requirements, and environmental protection standards for tourism development.

Answer

A key role of government is to create the policies, laws, and regulations that guide tourism development. [11, 26] This includes critical functions like land-use planning (zoning), setting safety and quality standards, protecting natural and cultural assets, and ensuring a stable environment for private sector investment and operation.

TMC - Tourism Management Certificate Practice Test

TMC - Tourism Management Certificate Practice Test

TMC - Tourism Management Certificate Tourism Economics and Policy Questions and Answers