The existence of inflation in a country that is higher than inflation in the rest of the world will tend to

Question

Quizplus · Accepted Answer

Higher inflation in a country compared to the rest of the world makes its goods and services more expensive, reducing exports and increasing imports. This leads to an increased supply of the country's currency in the foreign-exchange market as more currency is exchanged to pay for imports.

The Existence of Inflation in a Country That Is Higher