Question

Discuss whether a country experiencing inflation will always have a balance of payments problem

Answer 1

Answer:

The monetary transmission mechanism is the process by which asset prices and general economic conditions are affected as a result of monetary policy decisions. Such decisions are intended to influence the aggregate demand, interest rates, and amounts of money and credit in order to affect overall economic performance.

Answer 2

Answer:

With less export and more import prices there will be Balance of Payments difficulties as country A cannot pay for its imports. ... The country that experienced inflation would have a weaker currency, so the cost of their exports would be cheaper. Foreigners would by more of their goods because the goods would be cheaper.