Definition
- Marginal propensity to import
- The marginal propensity to import, or MPM, is the share of each extra pound of income that is spent on goods and services made abroad.
Example
Can you think of an example of marginal propensity to import?
Out of an extra £100 of income, a household spends £15 more on imported clothes, wine and holidays abroad. Its MPM is £15 ÷ £100 = 0.15.
Test yourself
Can you name the three marginal propensities to withdraw?