What is true of the multiplier effect in the context of tourism's economic impact?

The multiplier effect in the context of tourism's economic impact highlights how initial spending by tourists can lead to additional rounds of spending within the local economy. When tourists visit a destination, they spend money on a variety of services such as accommodations, dining, and attractions. This initial expenditure generates income for the businesses involved, which may then use a portion of that income to purchase goods and services from other local suppliers, thus promoting further economic activity in the community.

This recycling of money is critical because it amplifies the benefits of tourism. For example, a hotel that receives funds from tourists might invest in cleaning services, food supplies, or maintenance supplies, all of which can be sourced from local businesses. In this way, the initial spending by tourists not only benefits those directly servicing them but also creates additional opportunities for various sectors of the local economy, reinforcing the idea that tourism can be a significant driver of economic growth and stability in the region.

The other options do not accurately capture the essence of the multiplier effect as it pertains to tourism. For instance, the idea that tourism does not contribute to local economies contradicts the fundamental premise of the multiplier effect, which is based on the positive economic impact of tourist spending. Similarly, the focus on larger businesses misses the