Economics (AS & A Level) · May / June 2021 · Paper 32 · Question 29

The government of Lesotho introduces a programme to promote exports and to encourage firms to expand by subsidising local entrepreneurs. Which effect is this likely to have on incomes, the balance of payments current account deficit and government expenditure in Lesotho?

1. Aincomes: fall; balance of payments current account deficit: reduce; government expenditure: rise
2. Bincomes: fall; balance of payments current account deficit: uncertain; government expenditure: rise
3. Cincomes: rise; balance of payments current account deficit: reduce; government expenditure: no change
4. Dincomes: rise; balance of payments current account deficit: uncertain; government expenditure: rise

As printed in the paper