- abandonment costs
- absorbtion approach
- accelerated depreciation
- accession rate
- accumulated depreciation
- acid-test ratio
- adjustable peg system
- administered pricing
- administrative costs
- ad varolem
- advertising elasticity of demand
- advertising-to-sales ratio
- age-earnings profile
- age of inventory
- aggregate demand
- aggregate output
- aggregate supply
- agricultural economics
- agricultural policy
- agricultural subsidies
- amortization
- announcement effect
- annual meeting
- annual report
- anti-dumping
- anti-trust laws
- applied economics
- appropriation
- a priori
- arbitrage
- asset
- asset management
- audit
- austrian school
- autarky
- average cost pricing
- balanced budget
- balance of payments
- balance of trade
- balance sheet
- bank failure
- bank money
- bank reserves
- bankruptcy
- barriers to entry
- barter
- bear
- beggar-thy-neighbor
- behavioral economics
- beta coefficient (β)
- bill-of-lading
- bill-of-sale
- black economy
- black market
- blue chips
- blue-collar workers
- board-of-directors
- bond
- bond market
- bond prices
- bond ratings
- book value
- boom
- bourgeoise
- bretton woods agreement
- budget deficit
- budget surplus
- bull
- bust
- by-product
- callable bond
- call option
- cambridge school
- capacity utilization
- capital
- capital asset
- capital intensive
- capitalism
- capitalization
- capital-labor ratio
- capital market
- cartel
- cash flow
- casual employment
- central bank
- certificate of deposit
- certified public accountant
- c.i.f. (cost, insurance, & freight)
- common stock
- communism
- conglomerate
- consumer behavior
- consumer economics
- consumer price index (cpi)
- consumption
- corporation
- cost
- cost-based pricing
- cost-benefit-ratio
- cost of goods sold
- creditor nation
- credit squeeze
- credit union
- currency
- currency depreciation
- currency risk
- current account
- current assets
- current liabilities
- current ratio
- customs duty
- death taxes
- debt
- debt ceiling
- debt management
- debtor nation
- debt-to-equity ratio
- default risk
- deficit spending
- deflation
- demand
- depreciation
- depression
- deregulation
- derivatives
- descriptive economics
- devaluation
- development economics
- dinar
- dirham
- discreationary income
- disinflation
- dividend
- double taxation
- dumping
- duopoly
- easy money policy
- elasticity of demand
- elasticity of supply
- equilibrium
- eurobonds
- exchange rate
- expansion costs
- exports
- export subsidies
- externalities
- face value
- factoring
- factors of production
- federal deposit insurance company (fdic)
- financial account
- financial asset
- financial risk
- financial statement
- fiscal policy
- fixed asset
- fixed costs
- fixed exchange rates
- floating exchange rates
- f.o.b. (free on board)
- forced saving
- foreign aid
- foreign direct investment (fdi)
- forward contract
- forward exchange market
- franc
- free trade
- futures
- gatt
- gold standard
- government spending
- gray-collar workers
- gross domestic product (gdp)
- gross national product (gnp)
- hedging
- heterodox-economics
- hidden inflation
- hidden unemployment
- human capital
- hyperinflation
- idle capacity
- imperfect competition
- imports
- incentive pay
- income
- income distribution
- income redistribution
- income statement
- income tax
- industrialization
- inflation
- inflation accounting
- inheritance tax
- institutional economics
- intangible asset
- interest rate
- labor
- labor force
- labor force participation rate
- labor-intensive
- labor-productivity
- labor economics
- leverage
- marginal cost pricing
- mark-up pricing
- monetary policy
- money supply
- monopoly
- noncurrent assets
- normal depreciation
- normative economics
- options
- oligopoly
- operating risk
- orthodox-economics
- preferred stock
- present value
- producer price index (cpi)
- proletariat
- purchasing power
- put option
- rate of return pricing
- real asset
- real gross domestic product
- recession
- regulation
- seignorage
- shutdown costs
- socialism
- statement of cash flows
- stock
- spot market
- spot price
- stock market
- supply
- swaps
- tangible asset
- target return pricing
- taxation
- tight money policy
- trade deficit
- trade surplus
- trust
- unemployment
- unfair competition
- variable costs
- white-collar workers
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Absorbtion Approach
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: balance of trade, trade deficit, trade surplus
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