Input-Output Analysis

Question 1

Describe input-output analysis

Answer 1

A technique used to study the flow of inputs from one sector of the economy to another, allowing for the study of the interdependence of the sectors within a single economy

Question 2

Describe an economic system

Answer 2

An organized way for states to allocate resources and apportions goods and services to the national community.
It is used to control factors of production such as labor, physical resources, intellectual resources and capital

Question 3

What is an input-output/ technology/ Leontief matrix

Answer 3

This is a matrix representing the number of units of product each industry needed to produce a complete unit of product of each industry

Question 4

What are the characteristics of an input-output matrix

Answer 4

1. Must be a square matrix
2. All the elements must be within the range [0,1]
3. The sum of elements in each column must be less than or equal to 1

Question 5

Describe open and closed economic systems

Answer 5

Open- An economic system where industries sell some their product to industries outside the system (sum of columns<1)
Closed- An economic system where industries sell their product only to industries within the system(sum of columns= 1)