A-LevelEconomicsInternational economic issues9708/12 · May/June 2021 · Q211 Mark

As part of its trade policy, a government subsidises the cost of machinery used to manufacture goods for export. How will this affect the balance of payments?

Adecrease the deficit on the capital account

Bdecrease the deficit on the current account

Cincrease the deficit on the capital account

Dincrease the deficit on the current account

✓ Correct answer

B: decrease the deficit on the current account

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Topic: International economic issues, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source: A-Level Economics, May/June 2021 Paper 1 Variant 2, question 21.

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