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Economics (AS & A Level) · May / June 2023 · Paper 31 · Question 26

9708Relationship between countries at different levels of development

A multinational company (MNC) shifts its manufacturing capacity to a developing country. What is likely to be the short-run effect of this in the developing country?

  1. Aemployment increases: no; investment increases: no; short-run balance of payments current account improves: yes
  2. Bemployment increases: no; investment increases: yes; short-run balance of payments current account improves: no
  3. Cemployment increases: yes; investment increases: no; short-run balance of payments current account improves: yes
  4. Demployment increases: yes; investment increases: yes; short-run balance of payments current account improves: no

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Correct answer: D. employment increases: yes; investment increases: yes; short-run balance of payments current account improves: no

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