propensity to import

The country's high propensity to import means roughly 80% of government expenditures is recycled into foreign exchange.

Imports M will absorb a certain fraction of any additional income received by the community, the relevant proportion being known as the marginal propensity to import.

Where b is marginal propensity to consumer and m is marginal propensity to import.

The extent of the multiplier effect is dependent upon the marginal propensity to consume and marginal propensity to import.

Thus, marginal propensity to import (MPM) is defined as:

Notice that the slope of the import line is called the marginal propensity to import (mpm), this is the fraction of extra income spent on imports.

But this is dependent upon their marginal propensity to save (MPS)and marginal propensity to import (MPM).

First Details in Public It was the first time she has gone into detail publicly about the changes the Administration is looking for inside Japan to increase its propensity to import.

In other words, the marginal propensity to import is measured as the ratio of the change in imports to the change in income, thus giving us a figure between 0 and 1.

The marginal propensity to import (MPM) refers to the change in import expenditure that occurs with a change in disposable income (income after taxes and transfers).

Where MPS is Marginal Propensity to Save and MPM is Marginal Propensity to Import.

The UK government assumes that UK citizens have a high marginal propensity to import and thus will use a decrease in disposable income as a tool to control the current account on the Balance of Payments.

The marginal propensity to import is also 0.2, so that for every £10 million rise in income, spending on imports rises by £2 million and the consumption of home-produced goods and services rises by £6 million.

For example, if a household earns one extra dollar of disposable income, and the marginal propensity to import is 0.2, then of that dollar, the household will spend 20 cents of that dollar on imported goods and services.

These include the rising propensity to import by American manufacturers, retailers and consumers in search of the lowest-cost products, and slow growth in Europe and Japan compounded by the steadfast reluctance of their governments to implement expansionary policies.

This means that total withdrawals will be directly related to income and when plotted against income on a graph will be an upward-sloping line with a slope equal to the sum of the marginal propensity to save and the marginal propensity to import.

Given that previous periods of rapid growth had been brought to a halt in the face of escalating deficits on the balance of payments, largely because of the high marginal propensity to import manufactured goods, the improvement of the balance of payments figured prominently in the plan.

Interestingly, the Dutch balance of payments was in surplus most of the time, because a small deficit on the current account (because the propensity to import was high as a consequence of the skewed income distribution), was more than compensated by "invisibles", like the income from shipping services, and the revenues from foreign investment.

In a subsequent article he sums up the reasons for de-industrialisation as follows: 'The most convincing explanation', he writes, 'of progressive de-industrialisation in the U.K. is the weakening of the foreign trade sector with a slow growth of exports relative to other countries, and in relation to the propensity to import.'