If the marginal propensity to consume foreign imports (MPC_F) is equal to 0.15, then a(n): A) increase in domestic consumption will generate a 15% rise in imports. B) decrease in domestic consumption will generate a 15% rise in imports. C) increase in domestic income will generate a 15% rise in imports. D) decrease in domestic income will generate a 15% rise in imports.

Question

Quizplus · Accepted Answer

The marginal propensity to consume foreign imports indicates the proportion of additional income that is spent on foreign imports. Therefore, an increase in domestic income will lead to a 15% increase in imports.

If the Marginal Propensity to Consume Foreign Imports (MPCF) Is

If the Marginal Propensity to Consume Foreign Imports (MPC_F) Is