|
IN-KIND PAYMENT: A payment, usually in exchange for the productive efforts of resources, that takes the form of goods and services rather than the economy's standard monetary unit (that is, dollars). In other words, resource owners are compensated with a portion of the output that they helped to produce. The standard method of compensation, which is illustrated by the circular flow model, is for a firm to pay resource owners using money revenue received from selling its production. Hence most factor payments are monetary payments. However, in some circumstances firms and resource owners find it more convenient to use actual production for compensation, eliminating the middle sell-production-for-money step
Visit the GLOSS*arama
|
|
|
|
SLOPE, NET EXPORTS LINE: The negative slope of the net exports line is based on the marginal propensity to import (MPM). Because net exports are exports minus imports, the induced change in imports causes an opposite change in net exports. As such, the slope of the net exports line is negative, less than zero (but greater than negative one). The slope of the net exports line affects the slope of the aggregate expenditures line and thus also affects the magnitude of the multiplier process. Net Exports Line |
| The net exports line shows the relation between net exports by the foreign sector and the level of aggregate domestic income or production. The income and production measures most commonly used are national income and gross domestic product.A representative net exports line is presented in the exhibit to the right. This red line, labeled X-M in the exhibit, is negatively sloped, indicating that greater levels of income or production generate smaller levels of net exports by the foreign sector. This negative relation indicates that imports, which are subtracted from exports to derived net exports, are induced by an expanding economy. The net exports line graphically illustrates the net exports-income relation for the foreign sector, which is then added to the consumption line to derive the aggregate expenditures line used in Keynesian economics to identify equilibrium income and production. The slope of the net exports line presented here is negative. In fact, the slope of the net exports line is numerically equal to the negative of the marginal propensity to import. In this case the slope is equal to -0.075. The negative slope reflects induced net exports--more income means fewer net exports. Click the [Slope] button to illustrate. To illustrate the equality between slope and the negative of the marginal propensity to import, consider the equations for each. The slope of the net exports line is specified as the "rise" over the "run." The rise is the change in net exports measured on the vertical axis and the run is the change in income measured on the horizontal axis. However, because exports are autonomous, the only income induced change in net exports comes from imports, in a negative way. slope | = | rise run | = | change in net exports change in income | = - | change in imports change in income |
The marginal propensity to import (MPM) is the incremental change in net exports resulting from an incremental change in income. MPM | = | change in imports change in income |
The negative slope of the net exports line is the marginal propensity to import, or the slope of the net exports line is the negative of the marginal propensity to import, on is the negative of the other.The negative slope of the net exports line reflects induced net exports, which is net exports that depend on the level of income. If the aggregate economy has more income, then the foreign sector is induced to undertake fewer net exports. Of course, a drop in aggregate income induces the foreign sector to increase net exports.
Recommended Citation:SLOPE, NET EXPORTS LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: March 29, 2024]. Check Out These Related Terms... | | | | | | | | | | Or For A Little Background... | | | | | | | | | | | And For Further Study... | | | | | | | | | | | | | | | |
Search Again?
Back to the WEB*pedia
|
|
|
BEIGE MUNDORTLE [What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors seeking to buy either an AC adapter that won't fry your computer or a case for your designer sunglasses. Be on the lookout for slow moving vehicles with darkened windows. Your Complete Scope
This isn't me! What am I?
|
|
It's estimated that the U.S. economy has about $20 million of counterfeit currency in circulation, less than 0.001 perecent of the total legal currency.
|
|
"The mediocre teacher tells. The good teacher explains. The superior teacher demonstrates. The great teacher inspires." -- William Ward ‚ Texas Wesleyan University Administrator
|
|
ARMA Autoregressive Moving Average
|
|
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.
User Feedback
|
|