Answer to Question #172506 in Macroeconomics for yohannis hebana

Question

Q1. The following transaction table represents an intersectoral interaction in a hypothetical economy. The economy has three sectors: Agriculture (AGR), Manufacturing (MNF), and Service (SER). AGRR MNF SER Final Demand Total output AGRR 20 40 40 20 120 MNF 10 5 20 90 125 SER 40 80 30 50 200 Value added 50 0 110 Total input 120 125 200 (a) Extract the A-matrix, the matrix of technical coefficients. (b) Calculate the Leontief, (𝐼 − 𝐴), matrix. (c) Calculate the Leontief inverse, (𝐼 − 𝐴) ିଵ, matrix. (d) Calculate the multiplier effect of a unit change in final demand of the agriculture (AGR) sector on total output. (e) Calculate the multiplier effect of a unit change in final demand of the manufacturing (MNF) sector on total output. (f) Calculate the multiplier effect of a unit change in final demand of the Service (SER) sector on total output. (g) Decompose each of these effects (in d, e, and f) into direct and indirect effects and interpret their meanings. 

Answer 1

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