Anytime a major league sports team wants a new stadium the teams argue that a new stadium will draw more attendees and somehow make the team better. Discuss the merits of this as well as the flaws.
Merit of building a new stadium is it is an economic activity and requires many raw material and labor force. So, the employment in the area would rise. The new stadium can encourage the sports activity and people can enjoy by watching their sports in the stadium. The government can earn revenue by giving it to the organizers who can organize many events.
The disadvantage is the building of a new stadium requires huge land, so the land available for other economic activity decreases. Also, to finance the construction of a stadium, the government needs huge monetary resources, so it has to divert the funds from other activities to building a stadium and it could increase the taxes in the state to finance the construction. The increase in taxes would result into fall in aggregate demand.
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