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.

Collins Dictionary of Economics, 4th ed. © C. Pass, B. Lowes, L. Davies 2005
References in periodicals archive ?
The seriousness of this country's propensity to import is reflected by the fact that out of every N1 of new money created, about 68 kobo is spent on imports.
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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.
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Furthermore, the propensity to import is heavily influenced by economic conditions.
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