Explain How Response Expansion Works, Using an Example to Illustrate

question 55

Essay

Explain how response expansion works, using an example to illustrate the concept.

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Definitions:

Services Balance

A measure of the difference between a nation's exports and imports of services, part of the broader current account balance.

Trade Deficit

A scenario in which a country buys more goods and services from abroad than it sells to other countries, resulting in a negative trade balance.

Merchandise

Goods or products that are bought, sold, or traded, often in a retail environment.

Comparative Advantage

The capacity of a person or a team to perform a specific financial task more effectively than other tasks.