The paper "Relationship Between Income Level and Cost of Import Goods" is a wonderful example of a literature review on macro and microeconomics. Income is the opportunity to save and invest gained by different economic entities during a particular period represented in monetary units. Economic entities or groups include the government, firms, and households (Barr 2004). Households are groups of people who share income with the aim of consumption. Income, for homes and individuals, is obtained by summing their salaries, wages, interests’ payments, profits, rents, and other categories of earnings they receive over a particular period.
The Paper Seeks To elaborate on the relationship between income level and cost of import goods. In other fields like public economics, the ability of monetary and nonmonetary consumption accumulation as what is referred to as income (Barr 2004). Imports are purchases of foreign goods and services by domestic consumers. The good or service is brought to the country across its border from the external country. The country from which the right or the service is imported terms them as exports. Exports and imports are players in international trade finance transactions.
Goods imported or exported are said to be limited by export or import quotas customs authorities’ mandates. Tax may or may not be attached to the imported or exported goods. Imports exchanged according to the trade agreements of the involved countries (Joshi 2007). Effect of income level on the cost of imports According to Paul and William (2004), an increase in income increases the consumers’ wish of purchasing more services and goods. The services and commodities may be imports, and hence this increases the volume of goods imported.
When income level goes up, foreign goods and services’ demand also increases. This can be best explained by the marginal propensity to import, which is the ratio of change in the volume of imports to modification in the level of income. For example, assuming that taxes and government purchases are fixed, MPs are calculated by taking the reciprocal of the 1- marginal propensity to consume.
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