propensity to import

Propensity to importclick for a larger image
Fig. 163 Propensity to import. The effect of an increase in the propensity to import on national income.
Propensity to consumeclick for a larger image
Fig. 162 Propensity to consume. The effect of an increase in the propensity to consume on national income.

propensity to import

the proportion of NATIONAL INCOME that is spent on IMPORTS.

The average propensity to import (APM) is given by:

The marginal propensity to import (MPM) is the fraction of any change in income spent on imports:

marginal propensity to import (MPM)

Alternatively, imports can be expressed as a proportion of DISPOSABLE INCOME.

A rise in the propensity to import decreases consumption expenditure on domestically produced output for a given income level, for example, from OC to OC1 in Fig. 163. This increases the imports withdrawal from the CIRCULAR FLOW OF NATIONAL INCOME and reduces national income from OY to OY1.See MULTIPLIER, IMPORT PENETRATION.

References in periodicals archive ?
However, it should be emphasized that the current account position signals the country's higher propensity to import as the country gears up for higher growth momentum.
Part of this may be down to a higher propensity to import in Africa, but that can't possibly be the whole story.
Current account surpluses of oil producers including Saudi Arabia is the effect, not the cause, of oil price fluctuations, and their sizeable propensity to import, hence recycle excess capital.
Mark Andrews, MENA Regional Director, Edexcel, said: "The rapid growth of the economy and the national propensity to import skilled labour has created huge opportunities in the UAE for education and training providers; however, the lack of sufficient professional players is slowing down the growth of the industry.
Our propensity to import is also brelow average, suggesting that we are not to any great extent specialising in those activities where we possess some form of competitive advantage.
Furthermore, the propensity to import is heavily influenced by economic conditions.
Although "Wal-Mex" provides wages and benefits comparable or superior to its chain competitors, its automated pricing and inventory management have led to a net job loss in the retail sector, while its propensity to import and its market power have stifled domestic entrepreneurship and production.
Although the current account incorporates more than trade in goods and services, our propensity to import more goods than we export largely explains the current account deficit.
The terms r, sd, mmr, apm, m, and rm denote international reserves, variability measure of the variations in the balance of payments, money market rate, the average propensity to import, the level of imports and workers' remittances.
It pointed out that the reduction in (what we would call) the propensity to import would increase national income, and consequently suggested that it was through import substitution that any new industries would create employment.
However, unless there is a total ban on a nation's foreign imports, as y increases the marginal propensity to import will worsen the trade balance.