Suppose in an Input-Output Model for an economy, Sector X is heavily reliant on itself for production, with a high coefficient in its technology matrix. If the self-dependency coefficient of Sector X exceeds 0.9, which of the following would most likely be true about the equilibrium output solution for this economy?
1
It will remain stable as high self-dependency stabilizes output.
2
The output will be high for Sector X, leading to reduced interdependencies in other sectors.
3
The system may exhibit explosive growth in Sector X, making it difficult to achieve equilibrium.
4
Sector X’s high dependency will lower the output needed from other sectors, stabilizing equilibrium.