The marginal propensity to import is the_________ that is spent on imports.
A) fraction of an increase in potential GDP
B) total amount of potential GDP
C) total amount of real GDP
D) fraction of an increase in real GDP

Question

Quizplus · Accepted Answer

The marginal propensity to import is the fraction of an increase in real GDP that is spent on imports. It represents the portion of an increase in income that is used to purchase foreign goods and services rather than domestic goods and services. Therefore, choice D is the best answer.

The Marginal Propensity to Import Is The_________ That Is Spent