According to the absorption approach, the economic circumstances that best warrant a currency devaluation is where the domestic economy faces

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According to the absorption approach, a currency devaluation is best warranted when the domestic economy faces unemployment coupled with a trade deficit. This is because a devaluation will make domestic goods cheaper abroad, boosting exports and reducing the trade deficit while also making imports more expensive, encouraging domestic production and reducing unemployment.

According to the Absorption Approach, the Economic Circumstances That Best