Certified Residential Appraiser Practice Exam

What encompasses the economic activity of a community that attracts income from outside its borders?

1. Economic Base

2. Assemblage

3. Surplus Land

4. Excess Land

The correct answer is: Economic Base

The concept of the economic base refers to the fundamental economic activity in a community that generates income and stimulates growth by attracting resources from outside the area's borders. This can involve various sectors, such as manufacturing, trade, tourism, and services that draw in revenue from external sources, leading to greater economic development and job creation within the community. By focusing on income generated from outside, a community can foster an economic environment that relies less on local consumption and instead promotes skills, employment, and investment brought in from other regions. This is essential for understanding how local economies function and grow, especially in appraisals where recognizing the value of a property can depend on the economic robustness of the area it is in. In contrast, terms such as assemblage, surplus land, and excess land relate to property and land use concepts and do not encapsulate the broader economic implications of attracting external income. Assemblage involves combining multiple properties to increase value, while surplus land and excess land refer to holdings that are not being utilized to their fullest potential, focusing more on land use than on economic activity.