# Final Demand

## Definition

**Final Demand** or final consumption in the context of an Input-Output Model denotes the ultimate destination of goods and services used up by individual households or the community to satisfy their individual or collective needs or wants.

## Formula

Final demand might be denoted as a vector or matrix (typically using or ).

### Single Region Case

In the single region case final demand is a vector and depicted as a column next to the Input-Output Matrix.

### Multi-Region Case

In the multi-region case, the global final demand a tensor, usually represented as a matrix of vectors and denoted as "Y":

with the final demand vector of domestic (country q) production in the main diagonal and direct imports to final demand from country p captured by off-diagonal vectors.

## Usage

The precise nature of final demand depends on the economic system modeled and may include:

- Consumption by Households
- Government Expenditures
- Inventories
- Capital Formation (Investment)
- Foreign Exports

Adjusting final demand is and exploring economic implications is a core element of Input-Output Analysis.

## Notes

The sum of final demand equals to GDP (=sum of final sales)

## Code

## Further Resources

## References

- Eurostat SUT Manual

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