Using the concept of the expenditure multiplier and the circular flow model, explain the possible impact of the Athletes Olympics on the growth economy.

Essay by eunice88College, Undergraduate September 2006

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The firms will get more benefits from the Olympics of China especially for the construction industries. They need to build housing for athletes since China does not have sufficient accommodation by building more hotels for tourists or visitors. Besides that, the firms playing vital role by building stadium to held the games. Consequences, the firm will make profits due to the autonomous change in expenditure will bring about a proportionately greater change in the level of income. The Olympics of China encourages tourists to visit and incredibly they will spend money in China will lead to the high investment, therefore the leakages in the circular flow will decrease.

In order to gain more profits, the firms will in charge of the transportation such as make the arrangement of buses and trains for the visitors around the world to attend for the Olympics who are the guests of hotels and even offer tourists free services of sending them to hotels from airport.

Not only that, the firms will get advantages from selling entrance ticket for visitors by ticketing office. When the games of Olympics start, food industries will sell foods and drinks to visitors and even souvenirs like key chains of Olympics and others to them in order to gain profits. Tour agencies will recommend some tour packets for the tourists. In addition, Tourists will be willing to spend money on entertainment, they will taste the new foods in restaurants and shop around by visiting to souvenir shop. Media happened to be the role model of advertising Olympics. Television and radio will give us the latest news about Olympics through satellite.

There are many advantages for firms in China because of the higher consumption will leads to an increase of investment incredibly higher level of employment occurred, workers in China will...