What is the relationship between the marginal propensity to import and the aggregate demand function?
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What is the marginal propensity to import when M = 60 + 0.06Y? What is the relationship between the marginal propensity to import and the aggregate demand function?
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The fraction of additional revenue spent on imports is known as the marginal propensity to import M = 60+ 0.06Y is a given value. As a result, the marginal propensity to import (m) equals 0.06. It reflects induced imports, which are a portion of total imports that are a consequence of income. Because the marginal inclination to import harms the aggregate demand function, aggregate demand falls as income rises. Because the extra money is spent on foreign goods rather than home items, this is the case.
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