absorbtion approach

Discipline: Economics

The absorbtion approach is a form of measuring the trade balance of a nation by looking at the amount of national income absorbed by national investment and consumption.

In a mathematical equation, the absorbtion approach is expressed as:

B = N - X, where:

B = balance of trade,
N = national income,
X = amount of national income used for investment or consumption in the nation.

Also See:

· trade balance< br/> · trade deficit
· trade surplus

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