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Inflation, exports and imports

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Inflation, exports and imports

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • March 1, 2021 at 2:44 pm #612352
    ilham9089
    Member
    • Topics: 236
    • Replies: 176
    • ☆☆☆

    Hello sir, how does inflation make exports expensive and imports cheaper?

    March 2, 2021 at 4:41 pm #612724
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    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.

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