In the context of the monetary foreign trade theory the part of the national income and the import stressed for consumption and investments is called absorption.

Since the difference between the entire national income and the absorption is equal to the external contribution, an improvement of the external contribution results e.g. as consequence of a currency devaluation then only if the absorption sinks or less strongly than the national income rises.

The absorption corresponds to the national income then only if the balance of the balance of payments on current account in the broader sense amounts to zero. With an export surplus the absorption is smaller than the national income.

Articles in category "Absorption (political economy)"

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