Question 4
Consider an economy consisting of 3 sectors: M ('manufacturing'), E ('energy') and T ('transposrtation'). The following is known about the required inputs in each of these sectors from the outputs of different sectors for production of yearly outputs $x_1$, $x_2$ and $x_3$ in the sectors M, E and T, respectively:
(i) M requires 0.4 fraction of itself, 0.3 fraction of the output of E, and 0.4 fraction of T;
(ii) E requires 0.2 fraction of itself, 0.3 fraction of M, and 0.3 fraction of T;
(iii) T requires 0.3 fraction of itself, 0.2 fraction of M, and 0.4 units of E.
(A). Write the input-output matrix for this economy, and explain whether this economy corresponds to open or closed model.
(B) Assume now any external demand vector $b$ (of you choice!) that would make sense for this economy, and find the production levels that would solve that external demand.
