American Institute of Certified Planners (AICP) Practice Exam

Which technique is used to monitor real patterns of money flows in the economy?

1. Export Ratio

2. Input-Output Modeling

3. Manipulation

4. Sample

The correct answer is: Input-Output Modeling

Input-Output Modeling is a robust analytical technique used to understand the interdependencies between different sectors in an economy by illustrating how the output from one industry serves as an input to another. The model is built on a matrix that captures the flow of goods and services between industries, allowing planners to visualize and quantify real patterns of money flows. By employing Input-Output Modeling, planners can trace the economic impacts of changes in demand or production, thereby facilitating comprehensive analysis of how money circulates through various sectors. This methodology enhances understanding of the broader economic implications of specific policies or market changes, making it invaluable for economic planning and forecasting. Other techniques may offer insights into specific parts of the economy but do not provide the same level of comprehensive analysis of inter-industry relationships and money flows.