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Consider a hypothetical economy

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Consider a hypothetical economy

Published by Brilliant Ravens

Consider a hypothetical economy consisting of three sectors A, B and C with
inputs and outputs for a particular period. The balanced transaction table has
the form shown in the following table. The figures given are in billions of
shillings.
Input to
A B C External
demand
Total
Output
Output from
A
Output from
B
Output from
C
Other input
Total
input
18
27
54
9
108
30
30
40
20
120
45
60
60
15
180
15
3
26
108
120
180
Required:
(i) Form technical co-efficients input-output matrix from the above data. Name
this matrix ‘A’. (5 marks)
(ii) If the external demand was to change from Sh. 15 billion, Sh. 3 billion and Sh.
26 billion to Sh. 10 billion, Sh. 2 billion and Sh. 20 billlion, calculate the total
output for sector A, B and C.
You may assume (1-A)-1 = _1 336 216 234
109 288 372 294
396 348 486
Where I is identity matrix. (7 marks)
(iii) What will be the intermediate demand for sectors A, B and C in this case?
(3 marks)

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