Tea Tourism Shows Huge Potential as Engine of Growth for South African Economy

Correct! - Expenditure on tea tourism is an export of South Africa. Growing tea tourism increases exports, which increases aggregate expenditure and real GDP. As real GDP increases, employment in South Africa increases and the newly employed spend their incomes. Induced expenditure increases so aggregate expenditure increases by even more. This cycle of growth that continues through several rounds is the “new engine of growth”.

Good Job! - As the percentage of disposable income spent on domestically-produced goods increases, the marginal propensity to consume increases, which increases the multiplier effect of tea tourism.