Which approach analyzes a nation's balance of payments in terms of money demand and money supply?
A) the expenditure approach
B) the absorption approach
C) the elasticity approach
D) the monetary approach

Question

Quizplus · Accepted Answer

The approach that analyzes a nation's balance of payments in terms of money demand and money supply is the monetary approach. Option D is the only choice that reflects this approach. The expenditure approach analyzes the economy's output and income, while the absorption approach focuses on the total spending or absorption of an economy. The elasticity approach mainly deals with the responsiveness of demand to changes in price or income. Therefore, Option D is the best choice in this scenario.

Which Approach Analyzes a Nation's Balance of Payments in Terms