ECO – 201 Principles of Macroeconomics

Macroeconomic analysis is used extensively to analyze the potential impact of cities hosting professional sports teams and national/international sporting events.  Cities all over the world spend millions of tax dollars luring either the Summer or Winter Olympics.  Once they secure the Olympics, they spend years and often billions of dollars preparing for the Games by building arenas, improving roads, etc.  These cities cite the macroeconomic benefits of hosting international events of this magnitude to justify spending enormous amounts of money to secure and prepare for the Olympics.


A.  Using the aggregate demand/aggregate supply model, briefly discuss why cities spend millions of dollars to lure the Olympics to them.  Be sure to address the potential impact of the spending multiplier.

B.  What risks are cities taking when securing and preparing for the Olympics?  Based on the potential economic benefits and the risks involved, do you think cities are justified in spending millions of tax dollars to host the Olympics?

 C. Do you think spending tax dollars to lure a professional sports team is justified?  (Consider how regular sporting event during a season compares to a single sporting event like the Olympics or Super Bowl.) 

Source: Copied & Paraphrased from Dr. Gibson’s brain

NOTE: Write your initial response in a separate paragraph no more than 5-7 complete, non-compound sentences for each part. Put each part into a separate paragraph.  Subsequent responses must be no more than 10 complete, non-compound sentences. All sources must be cited. Information must not be copied directly from any source.   



For sources always use:



Colander, D.C. (2011). Economics: Macro and micro (Custom). New York: McGraw-Hill Irwin Publishing. or everything for this series or author.