Monetary policies adopted by a country do not affect its trading partners as long as the partner countries use different currencies.

Question

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Monetary policies adopted by a country can affect its trading partners if the partner countries use the same currency or if there are strong economic ties and interdependence. For instance, if a country pursues expansionary monetary policies (e.g. lowering interest rates, increasing money supply) this may lead to currency depreciation and boost exports, and at the same time, discourage imports from other countries. Conversely, if a country pursues contractionary monetary policies (e.g. raising interest rates, decreasing money supply), this may lead to currency appreciation and hurt exports, and at the same time, encourage imports. Overall, monetary policy decisions can have spillover effects on international trade and global economic activity.

Monetary Policies Adopted by a Country Do Not Affect Its