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Economics (AS & A Level) · May / June 2021 · Paper 12 · Question 21

9708Protectionism

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?

  1. Adecrease the deficit on the capital account
  2. Bdecrease the deficit on the current account
  3. Cincrease the deficit on the capital account
  4. Dincrease the deficit on the current account

As printed in the paper

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Correct answer: B. decrease the deficit on the current account

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