Economic Research Methods

Why is it a mistake to equate statewide GDP per capita with an individual’s earnings?

• A state average cannot establish an individual’s income
• State GDP per capita is equal to average employee wages by definition
• The measure excludes all production by corporations and government
• Differences in commuting patterns automatically equalize every resident’s income

What information is missing from a median household-income statistic alone?

• Whether the midpoint refers to an equally weighted set of households
• Whether nominal income was converted to a common year’s dollars
• Whether survey respondents were drawn from all eligible neighborhoods
• How income is distributed above and below the median

What issue must analysts consider when using American Community Survey estimates?

• A guaranteed complete enumeration for every city and neighborhood
• Changes in coastline measurement used for standardizing ACS weights
• Sampling uncertainty
• Survey observations that are independent of all household response patterns

Why should a one-year ACS estimate not be casually compared with a five-year estimate?

• One-year and five-year estimates represent different economic concepts and can never be compared
• The coverage periods and statistical methods differ
• Five-year estimates contain only one fifth as many survey responses as one-year estimates
• Their geographical boundaries must be different in every release

Why may the Census estimate base for April 2020 differ slightly from the original 2020 enumeration?

• The estimates program makes technical adjustments
• The annual estimates program uses an entirely unrelated state boundary
• The census excludes residents employed outside their home county
• Later estimates are computed without reference to the census baseline

Why does BEA use a value-added approach to estimate state GDP?

• To measure sales revenue at each stage and then sum all transactions
• To exclude depreciation from all manufacturing output
• To replace income-based accounts with household expenditure surveys
• To avoid counting intermediate business sales repeatedly as final output

Which denominator is standard for comparing state population density?

• Total land and water area measured under a consistent survey year
• The state’s total surface area including tidal waters
• Urbanized land area only, excluding all rural counties
• Land area

Which location determines where production enters a state’s GDP?

• The headquarters location of each corporation
• The state where employees report personal income taxes
• The place where production occurs
• The place where business profits are distributed to shareholders

Why can a New Jersey commuter’s wages relate to GDP generated outside New Jersey?

• Cross-state earnings are allocated to the worker’s place of residence in GDP
• The person may work and produce output in another state
• State GDP adds all commuting costs to output in the origin state
• Regional GDP assigns production according to homeownership rather than workplace

Which statement distinguishes state GDP from residents’ disposable income?

• GDP measures in-state production, while disposable income tracks income available after personal taxes
• GDP and disposable income both track household cash flow but use different price indexes
• GDP records household net wealth whereas disposable income measures firms’ annual profit
• GDP measures production by residents anywhere, while disposable income covers production inside the state

What limits a comparison of nominal GDP across two years?

• Year-to-year population changes are the only reason nominal GDP can change
• Nominal GDP removes all changes in market prices by construction
• Nominal GDP is calculated from quantities alone with no monetary valuation
• Different prices may contribute to the change

Why should chained-dollar industry GDP components not always be summed to reconstruct total GDP?

• Industry accounts include only private companies, while total GDP includes government
• Real industry output is measured at current prices but total output uses fixed quantities
• Chain-type quantity indexes are not strictly additive across components
• An industry’s value added is identical to its gross sales in all periods