Abiblo Economics - Absorption
In industrial organisation, absorption means the merger in which the acquired company transfers all the assets and liabilities to the acquiring company in return of cash and securities.
Absorption means the total expenditure on services or real goods by investors, governments and consumers. It is the use of output. It excludes the exports and includes imports.
Absorption is contrasted from production which includes exports and excludes imports.
The absorption has its own approach to devaluation where it looks at its effects on various form of expenditure and point out that devaluation will only improve the payment balance on current account if there is an increase in production in relation to absorption.
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