If the marginal propensity to import (MPZ) is positive but less than unity:
A) the import function is horizontal.
B) the import function has a negative slope.
C) the import function has a positive slope.
D) the import function is vertical.

Question

Quizplus · Accepted Answer

The marginal propensity to import (MPZ) being positive but less than unity means that as income increases, imports increase but at a decreasing rate. This results in the import function having a positive slope, indicating a direct but not one-to-one relationship between income and imports.

If the Marginal Propensity to Import (MPZ) Is Positive but Less