Question

When real GDP​ increases, the change in imports equals​ _______.

A.the marginal propensity to import divided by the increase in real GDP
B.​(1+ the marginal propensity to ​import) times the increase in real GDP
C.the increase in real GDP divided by the marginal propensity to import
D.the marginal propensity to import times the increase in real GDP

Answer 1

The change in imports when real GDP increases equals the marginal propensity to import times the increase in real GDP.

Step-by-step explanation:

When real GDP increases, the change in imports equals the marginal propensity to import times the increase in real GDP. The marginal propensity to import (MPI) signifies the proportion of additional national income that is spent on imports. As a nation's income grows, such as when real GDP rises, consumers spend more on goods and services, including those from abroad, which increases imports. Therefore, the change in imports is directly proportional to the increase in real GDP, scaled by the MPI.