Economics 0455 · IGCSE · Current account of balance of payments
Current account of balance of payments — practice question
Ireland has drawn a substantial number of foreign multinational companies (MNCs) to establish production there. These firms provide jobs for about 10% of the country’s labour force and account for a large share of Ireland’s exports. In 2016, Ireland’s current account surplus in the balance of payments decreased, while government expenditure increased.
(a)[2]
Identify two reasons why an MNC may decide to begin producing in another country.
(b)[4]
Explain two reasons why a person may wish to work for an MNC.
(c)[6]
Analyse how a rise in exports could improve a country’s economic performance.
(d)[8]
Discuss whether or not a rise in government spending will reduce a surplus on the current account of that country’s balance of payments.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Easy access to raw materials” …