What is the marginal propensity to import?
A)It is the change in incomes resulting from a change in imports.
B)It is the effect on net exports resulting from a change in imports.
C)It is the effect on imports of a change in the exchange rate.
D)It is the change in imports that results from a change in income.

Question

Quizplus · Accepted Answer

The marginal propensity to import (MPI) represents the change in imports that results from a change in income. It is the slope of the import function and is calculated as the change in imports divided by the change in income. MPI helps to determine the impact of changes in income on imports and, therefore, on the overall trade balance.

What Is the Marginal Propensity to Import