Relatively high rate of inflation

• What effect does a relatively high rate of inflation have on a country's exports?

  It makes a country's exports more expensive than other nations
• Why do foreign buyers look for substitute products when inflation is high in a country?

  Because the country's exports become more expensive
• What happens to exports and the current account balance when exports fall due to high inflation?

  Exports fall and the balance on the current account worsens
• How does high inflation affect the pricing of goods/services in other countries?

  It may make goods/services cheaper in other countries
• What might domestic consumers do when goods/services are cheaper in other countries due to high inflation?

  They may switch demand to foreign goods
• What is the effect on the current account balance when imports rise due to high inflation?

  The balance on the current account worsens