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Balance scale with disposable income represented by weights on one pan and imports symbolized by weights on the other pan, illustrating the relationship between the two

Understanding Marginal Propensity to Import (MPM): Keynesian Theory, Calculations, and Implications

February 26, 2025 FinanceFacts101 Business Finance

Introduction to Marginal Propensity to Import (MPM) The concept of Marginal Propensity to Import (MPM) is a crucial aspect of macroeconomics that reveals how changes in disposable income affect the demand for imports. This term is derived from Keynesian economics, which postulates that consumer spending and income are closely interconnected.