If the United States is trading with Italy and has high inflation while Italy does not, the prices of American goods in Italy will be high.

Question

Quizplus · Accepted Answer

If the US has high inflation, the prices of American goods will be high regardless of where they are sold, including in Italy. This means that American goods will be relatively more expensive than Italian goods, and hence may not be as competitive in the Italian market.

If the United States Is Trading with Italy and Has