The consumption matrix C for the U.S economy in 1972 has the property that every entry in the matrix (1 – C)–1 Is nonzero (and positive).1 What does that say about the effect of raising the demand for the output of just one sector of the economy?
As the Leontief production equation is , which is also written as
Now if has all entries positive , then since d is the final demand vector so it has positive entries. So by matrix multiplication increase if d any entry in d is increased, that is increases.
Hence if the demand in any sector increases, then the production in every sector will also increase.