export multiplier

Export multiplierclick for a larger image
Fig. 69 Export multiplier. The effect of an increase in exports on national income. The additional exports (AE) serve to increase total injections and shift the injection schedule to the right, increasing national income by Y1 Y2 .

export multiplier

the ratio of the increase in a country's NATIONAL INCOME to the increase in the demand for the country's EXPORTS that brought it about. The INJECTION of increased exports into the CIRCULAR FLOW OF NATIONAL INCOME MODEL raises national income by some multiple of the original increase in exports. The value of the export multiplier depends on the country's MARGINAL PROPENSITY TO SAVE, MARGINAL PROPENSITY TO IMPORT and MARGINAL PROPENSITY TO TAXATION. The larger these propensities - the larger, that is, the ‘WITHDRAWALS’ from the income flow -the smaller will be the value of the export multiplier. See also MULTIPLIER, FOREIGN TRADE MULTIPLIER, EXPORT-LED GROWTH.
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