Suppose that country I's income elasticity of demand for imports is 0.8 and that country II's income elasticity of demand for imports is 1.5. These income elasticities indicate that growth in country I would be classified as __________ and that growth in country II Would __________.

Question

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Income elasticity of demand for imports indicates how demand for imports changes with a change in a country's income. A value less than 1 (like 0.8 for country I) suggests that demand for imports grows at a slower rate than income, often considered "antitrade" growth. A value greater than 1 (like 1.5 for country II) indicates that demand for imports grows faster than income, which can be classified as "protrade" or "ultra-protrade" growth.

Suppose That Country I's Income Elasticity of Demand for Imports