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The foreign trade multiplier also known as export multiplier operates like the investment multiplier of Keynes. It may be defined as the amount by which national income of a nation will be raised by a unit increase in domestic investment on exports. As exports increase there is an increase in the income of all persons associated with the exports industries.These in turn create demand for goods.But this is dependent upon their marginal propensity to save (MPS)and marginal propensity to import (MPM). The smaller these two propensities are,the larger will be the value of multiplier and vice versa. In very simple terms we can say that foreign trade multiplier is a concept that states that net exports(exports minus imports) may magnify the impact on nation's income. ==Postulations== The foreign trade multiplier based on the following: 1.There is full employment in the domestic economy. 2.There is direct link between domestic and foreign country in exporting and importing goods and the country is small with no foreign country. 3.It is on a fixed exchange-rate system, the multiplier is based in instantaneous process without time lag and the domestic Investment(id) remains invariable. 4.There is no accelerator and the analysis is applicable to only two countries. 5.There are no tariff barriers and exchange controls. 6.The government expenditure is constant. 抄文引用元・出典: フリー百科事典『 ウィキペディア（Wikipedia）』 ■ウィキペディアで「foreign trade multiplier」の詳細全文を読む スポンサード リンク
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