Under the absorption approach,if the economy is below full employment,then it is best to improve the trade balance by:

Question

Quizplus · Accepted Answer

The absorption approach suggests that if the economy is below full employment, then increasing domestic production is the best option for improving the trade balance. One way to do this is through devaluation, which would make domestic goods more competitive in the international market and increase exports. Cutting government spending, household spending, or income would decrease demand in the economy and potentially worsen the economic situation.

Under the Absorption Approach,if the Economy Is Below Full Employment,then