What is marginal propensity to import (MPM)?
MPM is the amount that imports will increase (or decrease) for every increase (or decrease) in disposable income.
When income increases, those who benefit from it have a choice to either save or spend. If they spend 25% of their increase in income on imported items, their MPM would be 0.25.
Marginal Propensity to Import = Change in Imports / Change in Income