how does inflation affect the aus economy? (1 Viewer)

[mr_speedy]

any help

 

[malayz_angel]

Hehe...last year I would not believe that I would know the answer to this--technically this is a fairly simple way of looking at it--inflation makes Australia's goods more expensive==> other countries are more reluctant to buy them==> decreases our 'international competitiveness'==> becomes likely that we will spend more on imports than we get on exports==> increases our CAD and therefore foreign debt...

I hope this helps a bit...

 

[Minai]

I think its also important to add that the most important effect of inflation on the au economy is its restriction to economic growth - because tighter monetary policy must be used to curtail inflation, which in turn contracts growth.

 

[AGB]

inflation will also impact on exchange rates........that is one of the most important effects of inflation simply due to the fact that the exchange rate has such a large impact on virtually everything

 

[mr_speedy]

how does inflation effect exchange rates

any help?