Economic Analysis

Question 1

Economic base analysis

Answer 1

looks at basic and non-basic economic activities. Basic activities are those that can be exported, while non-basic activities are those that are locally oriented. The exporting industries make up the economic base of a region.

Question 2

Basic activities

Answer 2

those that can be exported. The exporting industries make up the economic base of a region.

Question 3

Non-basic activities

Answer 3

those that are locally oriented

Question 4

three major economic analysis methods

Answer 4

economic base, shift-share, and input-output analysis

Question 5

location quotient

Answer 5

Needed to identify economic base industries.

Ratio of an industry’s share of local employment divided by its share of the nation.

Question 6

LQ less than 1

Answer 6

indicates an importing economy

Question 7

LQ more than 1

Answer 7

the area is an exporting economy

Question 8

Shift-share analysis

Answer 8

analyzes a local economy in comparison with a larger economy. This analysis looks at the differential shift, proportional shift, and economic growth.

uses employment information by sector for two points in time.

Question 9

Input-output analysis

Answer 9

a quantitative method that links suppliers and purchasers to determine the economic output of a region.

Requires a large amount of data so it’s expensive.

Input-output analysis can be used to determine the employment effect that a particular project has on a local economy.

Question 10

How is input-output analysis similar to economic base analysis?

Answer 10

it uses an economy’s structure to determine the economy in the future

Question 11

Primary suppliers

Answer 11

do not purchase input for production. They typically purchase only final goods;

Part of input-output analysis

Question 12

Intermediate suppliers

Answer 12

sell outputs to either intermediate or final purchasers

Part of input-output analysis

Question 13

Intermediate purchasers

Answer 13

buy outputs from others and use them as inputs to produce outputs

Part of input-output analysis

Question 14

Final purchasers

Answer 14

use their inputs as final goods

Part of input-output analysis

Question 15

3 tables of input-output analysis

Answer 15

transactions, direct requirements, total requirements

Question 16

Assumptions of input-output analysis

Answer 16

Input-output analysis assumes that there are no economies of scale, that technology and labor are static, that inputs are not substitutable, and that each industry only produces one group of goods. Consumption of inputs is constant and there are no national imports or exports. An economy’s total output is equal to total production plus intermediate sales.

Question 17

North American Industry Classification System (NAICS)

Answer 17

standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data about the U.S. economy.

Question 18

What is the difference between basic and non-basic employment?

Answer 18

Basic is an export, it brings in money from the outside.

Non-basic is local, recirculates the outside money

Question 19

What is the economic base multiplier?

Answer 19

Multiplier = total jobs/basic jobs

The indirect effect of $1 additional basic activity on the economy = Multiplier-1

Question 20

What is the equation for determining a location quotient?

Answer 20

Ratio of the relative share of a sectors employment in the region o the relative share of employment in the country

Question 21

What kind of data is used to determine the location quotient?

Answer 21

Employment data, such as contained in the County Business Patterns

Question 22

What are the different components involved in shift-share analysis?

Answer 22

national component (share), industry component (mix), regional component (shiftt)

Question 23

What does it mean if the regional shift is negative?

Answer 23

A negative regional shift happens when the growth in the local employment is less than the growth nationally

Question 24

What are the components of total production in input-output analysis?

Answer 24

Total production is decomposed into intermediate production (production to make other products) and final demand.

Question 25

What is a transactions table in input-output analysis?

Answer 25

The transaction table shows the inter-industry flows.

Which sector buys from other sectors and how much.