In economics, absorption is the total demand for all
final
Final, Finals or The Final may refer to:
*Final examination or finals, a test given at the end of a course of study or training
*Final (competition), the last or championship round of a sporting competition, match, game, or other contest which d ...
marketed
goods and services
Goods are items that are usually (but not always) tangible, such as pens or Apple, apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the Production (economics), production, distributio ...
by all
economic agents resident in an
economy
An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...
, regardless of the origin of the goods and services themselves. As the absorption is equal to the sum of all domestically-produced goods consumed locally and all imports, it is equal to
national income = C + I + G + (X - M)minus the
balance of trade
Balance of trade is the difference between the monetary value of a nation's exports and imports of goods over a certain time period. Sometimes, trade in Service (economics), services is also included in the balance of trade but the official IMF d ...
- M
The term was coined, and its relation to the balance of trade identified, by
Sidney Alexander in 1952.
The term "absorption" is often used in real estate to assess demand for leasing space.
Footnotes
Macroeconomic aggregates
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