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Effect of Inflation on Trade

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A. How would a relatively high home inflation rate affect the home country's current account, other things being equal?

b. Is a negative current account harmful to a country? Discuss.

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Solution Summary

This posting explains the effect of inflation on the current account, it briefly answers whether a negative current account is harmful to a country.

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a. How would a relatively high home inflation rate affect the home country's current account, other things being equal?

ANSWER: A ...

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