Propensity To Import

Summary of Propensity To Import

The relationship between income and the value of imports, expressed in monetary terms. Generally, the relationship is expressed in terms of the average propensity to import (imports as a percentage of national income) and the marginal propensity to import (changes in the average propensity to import in relation to increases and declines in national income). Income elasticity of demand for imports (the relationship between average propensity and marginal propensity) may be expressed as: Marginal propensity _ Income elasticity of

Average propensity demand for imports.

The marginal propensity to import has significance to the other nations in that changes in national income of the importing country may be manifested as changes in exports for trading partners.

(Main Author: William J. Miller)