According to the absorption approach, an increase in domestic expenditures must occur for currency devaluation to promote balance of trade equilibrium.

Name: According to the absorption approach, an increase in domestic expenditures must occur for currency devaluation to promote balance of trade equilibrium.
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The absorption approach suggests that for a currency devaluation to improve the balance of trade, domestic expenditures must decrease relative to income, not increase.

According to the Absorption Approach, an Increase in Domestic Expenditures