In foreign repercussion effect the size of the foreign trade multiplier of the exporting country will
Answers
Answer:
The foreign trade multiplier, also known as the export multiplier, operates like the investment multiplier of Keynes. It may be defined as the amount by which the national income of a country will be raised by a unit increase in domestic investment on exports.
Explanation:
As exports increase, there is an increase in the income of all persons associated with export industries. These, in turn, create demand for goods. But this is dependent upon their marginal propensity to save (MPS) and the marginal propensity to import (MPM). The smaller these two marginal propensities are, the larger will be the value of the multiplier, and vice versa.The foreign trade multiplier process can be explained like this. Suppose the exports of the country increase. To begin with, the exporters will sell their products to foreign countries and receive more income. In order to meet the foreign demand, they will engage more factors of production to produce more.
This will raise the income of the owners of factors of production. This process will continue and the national income increases by the value of the multiplier. The value of the multiplier depends on the value of MPS and MPM, there being an inverse relation between the two propensities and the export multiplier.
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Answer:
import and export is the correct answer
Explanation:
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