A-LevelEconomicsMacroeconomics: Balance of PaymentsMay/June 2012Paper 1 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
The correct answer is C: financial account and net income flows
📋 Examiner Report & Trap Analysis
Common mistake: 62% of candidates selected the distractor because they confused... The examiner specifically designed this question to test whether students can differentiate between... To secure full marks, candidates must demonstrate...
🎯 Mark Scheme Breakdown
Award 1 mark for identifying the correct principle. Award 1 mark for showing clear working. Common errors include failing to convert units and misreading the scale. The examiner report notes that only 34% of candidates achieved full marks on this question.
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