In economics, absorption is the total demand for all
final
Final, Finals or The Final may refer to:
*Final (competition), the last or championship round of a sporting competition, match, game, or other contest which decides a winner for an event
** Another term for playoffs, describing a sequence of cont ...
marketed
goods and services
Goods are items that are usually (but not always) tangible, such as pens, physical books, salt, apples, and hats. Services are activities provided by other people, who include architects, suppliers, contractors, technologists, teachers, doctor ...
by all
economic agent
In economics, an agent is an actor (more specifically, a decision maker) in a model of some aspect of the economy. Typically, every agent makes decisions by solving a well- or ill-defined optimization or choice problem.
For example, ''buyers'' (c ...
s resident in an
economy
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
, 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
The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...
- 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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