The marginal propensity to import is calculated as
A)imports divided by real GDP.
B)the change in imports divided by real GDP.
C)imports divided by the change in real GDP.
D)1- MPC.
E)the change in imports divided by the change in real GDP.

Question

Quizplus · Accepted Answer

The marginal propensity to import measures the change in imports that occurs as a result of a change in real GDP. Therefore, it is calculated as the change in imports divided by the change in real GDP. Choice A calculates the average propensity to import, not the marginal propensity to import. Choice B is only looking at the change in imports and not relating it to the change in real GDP. Choice C is dividing imports by the change in real GDP, which does not give the marginal propensity to import. Choice D calculates the marginal propensity to save, not import.

The Marginal Propensity to Import Is Calculated as