What is a NAICS code?

• A. a three-digit code used to classify employment levels
• B. a five-digit code for company sizes
• C. a six-digit code used to classify businesses by industry
• D. a two-digit code for tax brackets

Answer: (C)

NAICS codes identify the industry a business belongs to, using a six-digit code. NAICS stands for North American Industry Classification System and is used in the U.S., Canada, and Mexico to collect and report economic data. The digits form a hierarchy: the early digits place the business in a broad sector, and each added digit narrows to more specific industries. This system lets researchers and policymakers compare activity across industries and track economic trends consistently across North America. It’s not about employment levels, firm size, or tax brackets—the focus is on industry classification.