Economic Impact Analysis Test Bank Answers Ch.11

Chapter 11 Multiple Choice Questions

1. Among the main economic concepts used in economic impact analysis are…
2. Supply, demand, and equilibrium
3. Opportunity cost, net benefits, and market efficiency
4. Direct spending, multipliers, and regional income
5. All of the above
6. Criticisms of economic impact analysis include all of the following EXCEPT...
7. Emphasis on the local rather than national economy
8. Failure to consider effects on other areas
9. Often including capital or other costs as part of the positive economic impact
10. A lack of political interest in this type of analysis
11. Direct spending for an audience-based project like a sports stadium or arts festival should include all of the following EXCEPT
12. Ancillary direct spending
13. Added earnings of local employees
14. Ticket revenue from non-local residents
15. Parking revenue
16. The primary question to be asked regarding the economic impact of an event or institution is
17. How would the local economy differ if this institution or event did not exist?
18. How does the average local household benefit from this institution or event?
19. How much does the institution or event add to aggregate local earnings?
20. To what degree does the institution or event lead to future economic growth?
21. The formula for the Keynesian spending multiplier is (MPC is the marginal propensity to consume, MPS is the marginal propensity to save)
22. 1/(1-MPC)
23. (1-MPC)
24. 1/(1-MPS)
25. 1/(MPC-MPS)
26. If local consumers spend 40 cents of each dollar of income locally, a $1 million direct spending project will produce how much local economic impact?
27. $1 million
28. 1.4 million
29. .4 million
30. $1.67 million
31. The two main components of an economic base model are
32. Export goods and local services
33. Consumption goods and investment spending
34. Direct spending and multiplier effects
35. Supply and demand functions
36. The main components of the multiplier effect are induced and indirect income. Induced income refers to
37. Income produced by spending on local materials, energy, etc. as part of operating expenses
38. Income produced by spending at local restaurants or stores as part of attending the institution or event
39. Income produced by spending by the institution’s employees
40. Income produced by local businesses
41. The economic impact of a university might include all of the following EXCEPT
42. Increased human capital in the state or region
43. The effects of student spending
44. The effects of employee spending
45. The net effects of the university on local government budgets
46. None. All of the above are possible parts of economic impact
47. All of the following are criticisms of the New York Sports and Convention Center impact study EXCEPT
48. Added local spending estimates did not exclude local residents.
49. The center’s proposed stadium would replace another local facility
50. The land had other, more valuable uses
51. The multiplier covered an area that included the current facility
52. Input-Output Models….

a. assume that each industry’s output is comprised of a fixed set of inputs

b. are used almost exclusively for economic impact studies

c. are based on the Keynesian flow of income model

d. are rarely used in regional economic impact studies