Difference between revisions of "Output Multiplier"
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== Definition == | == Definition == | ||
| − | An '''Output-to-Output Multiplier''' indicates how total production will change as final demand is changed in any one sector of the economy. The output multiplier for sector j is the sum of column j of the [[Technical | + | An '''Output-to-Output Multiplier''' indicates how total production will change as final demand is changed in any one sector of the economy. The output multiplier for sector j is the sum of column j of the [[Technical Coefficient Matrix]]. This output multiplier measures the amount of output generated by a $1 change in final demand for the output of the jth sector. |
== Formula == | == Formula == | ||
Revision as of 12:41, 7 March 2022
Definition
An Output-to-Output Multiplier indicates how total production will change as final demand is changed in any one sector of the economy. The output multiplier for sector j is the sum of column j of the Technical Coefficient Matrix. This output multiplier measures the amount of output generated by a $1 change in final demand for the output of the jth sector.
Formula
If we represent the elements of the Leontief Inverse Matrix (
) as 
, then the output multiplier is defined as:
