Economics · Balance of Payments
Arrange the following logical steps in the correct sequence according to the Absorption Approach theory for achieving a Balance of Payments (BOP) surplus through currency depreciation: 1. National income (Y) exceeds total domestic expenditure (A). 2. Domestic currency undergoes depreciation in the foreign exchange market. 3. The Balance of Payments reaches a surplus state (BOP = Y - A). 4. Total domestic absorption (A) is reduced relative to national income (Y). Select the correct answer using the code given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 11, 2, 3, 4
- 24, 2, 1, 3
- 32, 1, 4, 3
- 42, 4, 1, 3✓
Correct answer
2, 4, 1, 3
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