Inflation, exports and imports

Again, this is really assumed knowledge from Paper BT (was Paper F1). If your country has a high level of inflation then prices of goods in your country will get a lot higher. Imports from other countries with lower inflation will not increase as much and so they become cheaper compared to goods produced in your own country. Similarly, your country will be charging a lot more for goods you export to other countries which make them more expensive compared to the same goods bought in the other country.