Country L has a current account deficit. Its firms increase their output per worker per hour, while productivity in competing countries remains unchanged.
Which result is most likely for Country L?
The deficit is likely to narrow because lower unit costs improve the price competitiveness of its products
The deficit is likely to narrow because higher output per worker raises the price of each export
The deficit is likely to remain unchanged because productivity affects output but not international competitiveness
The deficit is likely to widen because greater output per worker raises the cost of each unit produced
52 exam-style questions on OCR GCSE Economics 4.2 Balance of payments, covering 4.2.1 Balance of payments on current account, 4.2.2 Balanced account, surplus and deficit, 4.2.3 Calculate deficits and surpluses, 4.2.4 Analyse exports and imports data, 4.2.5 Importance of the balance of payments, and 4.2.6 Causes of surpluses and deficits. Each one has a worked solution and a mark scheme showing where the marks go.