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Question

Difficulty: EasyTourism and Its Contributions to Trade

When international tourists pay for accommodation, transportation, and local recreation within a host country, which category of trade earnings does this revenue represent?

  1. Invisible exportsAnswer
  2. B
    Visible exports
  3. C
    Direct personal services
  4. D
    Visible imports

Answer

The revenue earned from international tourists paying for local services is classified as invisible exports.
Tourism provides intangible services such as lodging, transport, and leisure to visitors from abroad. The money spent by these foreign tourists constitutes a foreign currency inflow, which is recorded as an invisible export in the balance of payments.

Step-by-Step Solution

1
Identify the nature of tourism activities
Tourism involves providing hospitality, transport, and entertainment services to foreign visitors.
Services are intangible receipts in international commercial trade.
2
Determine the trade classification for earnings from foreign visitors
Money spent by foreign tourists inside the host country brings foreign exchange into the national economy through service provision, constituting an invisible export.
Exporting invisible items means selling domestic services to non-residents.

Key Concept

Classification of tourism earnings as invisible exports in international trade
Estimated Time:45s
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Topics

Tourism and Its Contributions to Trade

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