If the MPM is 0.4, then a $2,000 increase in income will

Name: If the MPM is 0.4, then a $2,000 increase in income will
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Quizplus · Accepted Answer

MPM (Marginal Propensity to Import) is the fraction of each additional dollar of income that is spent on imports. If MPM is 0.4, it means that 40% of each additional dollar of income is spent on imports. Therefore, a $2,000 increase in income would result in an increase in imports of $800 (0.4 x $2,000 = $800).

If the MPM Is 0