The ______ is a theory of the balance of payments that shows how home-country spending on home-country goods changes relative to home-country output
A) monetary approach to currency deprecation
B) elasticities approach to currency depreciation
C) portfolio approach to currency depreciation
D) absorption approach to currency depreciation

Question

Quizplus · Accepted Answer

The absorption approach to currency depreciation is a theory of the balance of payments that shows how home-country spending on home-country goods changes relative to home-country output. It examines the relationship between national income, domestic absorption (consumption and investment), imports, and exports to determine the impact of a currency depreciation on a country's balance of trade.

The ______ Is a Theory of the Balance of Payments