chapter  4
32 Pages

Input-Output Analysis

The ultimate goal of all economic activity is to supply final products (including goods and services) for consumption. To produce a final product, input from several industries is required. The net contribution to production by a particular industry is termed value added. It can be measured as the difference between the industry's total sales and the cost of goods and services it purchases from other industries. The summation of all value-added contributions made by all industries as well as by individuals and the government equals the gross national product (GNP). The GNP is then the value measured in dollars of all such production for any particular year.