Economics Exchange Rate Systems Questions
Exchange rates have a significant impact on international tourism expenditure by country. When a country's currency depreciates or becomes weaker relative to other currencies, it becomes cheaper for foreign tourists to visit that country. This leads to an increase in international tourism expenditure as more tourists are attracted to the destination due to the lower cost of travel, accommodation, and other expenses.
Conversely, when a country's currency appreciates or becomes stronger, it becomes more expensive for foreign tourists to visit. This can result in a decrease in international tourism expenditure as fewer tourists are willing to spend more on their trips.
Exchange rate fluctuations can also affect the competitiveness of a country's tourism industry. A favorable exchange rate can make a country more attractive and competitive as a tourist destination, leading to increased tourism expenditure. On the other hand, an unfavorable exchange rate can make a country less competitive, resulting in a decline in tourism expenditure.
Overall, exchange rates play a crucial role in determining the level of international tourism expenditure by country, influencing the number of tourists visiting and the amount they spend during their trips.