A-LevelEconomicsInternational economic issues9708/12 · May/June 2012 · Q221 Mark
A firm borrows money from a bank based abroad in order to pay a lower rate of interest than is available from banks in its own country. Which two parts of the balance of payments accounts will be affected by this transaction?
Acapital account and currency reserves
Bcapital account and trade in services
Cfinancial account and net income flows
Dfinancial account and net current transfers
✓ Correct answer
C: financial account and net income flows
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