The Marginal Propensity to Import: How Imports Shape the Open Economy
The Marginal Propensity to Import, often abbreviated as MPI (and sometimes written in full as marginal propensity to import), is a central concept in open‑economy macroeconomics. It captures the share of an additional unit of income that is spent on imported goods and services rather than on domestically produced output. In practical terms, MPI measures…
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