Hawaii Economy

Why are ports and air links especially important to Hawaii’s economy?

• All goods arrive over mainland highways
• They connect geographically isolated islands with markets and supplies
• They eliminate every shipping expense
• The islands share land borders with California

What may happen when imported supplies are delayed in Hawaii?

• All import prices immediately become zero
• Business input costs and shortages may increase
• Port dependence disappears
• Every industry becomes unaffected

Why consider regional price levels when comparing incomes across states?

• Every state has identical living costs
• Nominal salaries automatically measure purchasing power
• Only island size determines wages
• The same dollar income buys different quantities of goods

When can nominal income grow while purchasing power decreases?

• Prices rise faster than income
• Prices fall faster than income
• Income growth always exceeds inflation
• Inflation is exactly zero

Which constraint can limit housing availability in Hawaii?

• Unlimited inexpensive land on every island
• No need for infrastructure
• A complete absence of housing demand
• Limited developable land and construction costs

Why might economic diversification help Hawaii during a tourism slump?

• All other industries would disappear automatically
• It forces visitor arrivals to rise
• It makes recessions mathematically impossible
• Other industries can provide alternative demand and jobs

What belongs in an analysis of Hawaii’s defense-related economy?

• Only visitor hotels
• Only agricultural irrigation
• Government operations and private military suppliers
• Only offshore coral reefs

What distinguishes real personal income from nominal personal income?

• Counting the number of mountains
• Excluding all wages
• Including only tourist expenditures
• Adjustment for price changes