1)Tourism helps in economic development by inflow of cash and other services we know that after introducing a vast area for tourism many less developed countries have developed and the standard of living has also increased. The inflow of cash has change alot in the economy the living standards, taste, preferences and even the education system has changed and it is giving much importance to tourism and related courses. Many of the facilities have been increased and new spots have been found for suitable tourism and many laws have been enforced regarding tourism. Tourism has created employment generation to many youth. All these phrases explain about the positive cons of tourism but tourism has some of the evil that is spreading of diseases imports of foreign goods to the tourist destination etc. Now us explain about tourism multiplier which explains about how much additional income has been produced by giving away some of the facilities and services regarding tourism. Let's make it clear with the help of an example tourism multiplier is a situation when a person comes to a destination he is provided with many of the facilities like hotel, maybe transportation facility , a tourist guide etc so if it is provided by a particular institution then this particular institution have to charge the tourist for availing all this facilities this shows a tourism multiplier effect where the tourist is actually getting all services from that institution and he is paying back the money, in short we can say that the money that is used for providing the customer all the services has been collected from him in the form of bill. This money ee may be used for many other things expansion of institution, giving away the salary to the workers, expanding the institution to attract new customers.

Now let us explain about the tourism leakages, it is a situation when the money that is actually spended for the tourism purpose doesn't benefits the same destination. For example if a foreigner works in other country for a short period of time and he earns money after that he leaves to his country back then the money earned by him goes along with him it was at the money actually is remitted note to the tourist destination whereas it is remitted to the foreign country which doesn't make sense economic development in our country.

Tourism substitution is a phenomenon weather is a substitution between the tourism products on the basis of value and quality. This often happens when in the case of product or services offered by a particular place that can be substituted by the other places too.

All these explains that all the tourism is beneficial for the economy but it can be some problems too. First of all the tourism multiplier actually helps in providing an attractive and a pretty impression about the tourism sector in the country but it is an extra expenditure done by the government sometimes it is not affordable by the less developed countries and they may not get as expected. In most cases the developed of the countries get an extra benefit by the tourism multiplier. Tourism leakage is also a problem because in the case of less developed countries the developed countries may use it as a tool for the exporting goods to the less developed countries and it may be a burden to the less developed countries. making a tourist place an attractive will attract many of the tourist to the destination but in order to make that attractive the government has to spend a huge amount of money it may cause a greater expenditure from the government sometimes it may harm the economy as it in order to make development in the tourism sector we may compromise with the other sectors too. Does there should be a balanced growth between every sectors and the tourism sector should also be given an extra care in order to attract the tourist and to increase the flow of money.

2)

The given economy is closed and there is no government intervention.

Now, consumption expenditure is given as

C = £40 million + 0.7.Y

Marginal propensity to consume is

mpc = 0.7

Hence, the value of multiplier is

m = 1/(1 - mpc) = 1/(1 - 0.7)

or, m = 3.33

Hence, value of the multiplier is not 4.

Option (A) is FALSE.

Planned investment is given as

I = £50 million

Y = GDP or Output

Now, at equilibrum the following identity should hold i.e.

Y = C + I

or, Y = £40 million + 0.7.Y + £50 million

or, 0.3.Y = £90 million

or, Y* = £300 million

Hence, the economy is in equilibrum if output is £300 million.

Option (C) is TRUE.

Now, putting Y* in C we get the equilibrum consumption expenditure as

C = £40 million + 0.7×£300 million

or, C = £250 million

Hence, at equilibrum level of income, consumption expenditure is not £260 million.

Option (B) is also FALSE.

We eliminate option (D) as we already got one option TRUE.

Answer is option (C) i.e. the economy is in equilibrum if the output is £300 million.

Hope the solution is clear to you my friend.