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4. Suppose the input coefficients matrix is: 0.4 0.2 0.2 A = 0 0.1 0 0 0.3 0.3 (i) Find (I-A)-1. Suppose labour is the

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4. Suppose the input coefficients matrix is: 0.4 0.2 0.2 A = 0 0.1 0 0 0.3 0.3 (i) Find (I-A)-1. Suppose labour is the sole primary input vector. Identify the direct and indirect effects on the value of employment following a 1 unit drop in final demand for the third product. (iii) What is the employment multiplier? (iv) How is your answer to (ii) altered if in fact only half the payments to primary inputs are spent on labour? Suppose in fact that for every & paid to primary inputs in sector 1, only half is paid to labour and in sector 2 none is paid to labour while in sector 3 all payments to primary inputs go to labour. How is your answer to (ii) altered now? How is your answer to (iii) altered? (Hint: think about how the labour; instead of all primary inputs, vector will look now)

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