Import penetration measures what aspect of imports?

• A. The extent to which imports are increasing
• B. The level of tariffs applied to imports
• C. The share of imports in domestic consumption
• D. The degree of exchange rate volatility

Answer: (A)

Import penetration is about how much of domestic demand is met by imports. It shows the extent to which the economy relies on foreign-made goods—essentially the share of imports in domestic consumption (or domestic demand). A higher penetration means a larger portion of what households and firms buy comes from abroad, indicating greater dependence on imported goods.

This is different from the growth in imports over time (which would be about whether imports are increasing), from tariff levels (which are policy charges on imports), or from exchange rate volatility (which measures how much the currency moves and affects trade, but not the proportion of demand satisfied by imports).