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economics - macro

Assume that UK inflation is 10 percent more than the (trade-weighted) average of that in
other countries and that there is an expansion of domestic money supply that forces
interest rates below the level of those abroad.
Question 9
What will happen to the current account balance (assuming it was initially in balance)?
A. Move into deficit.
B. Move into surplus.
Question 10
What will happen to the financial account balance (assuming it was initially in balance)?
A. Move into deficit.
B. Move into surplus

Any help would be great

Reply 1

NazifaNawer

Not sure about question 10 but the answer of question 9 is A. Because inflation will make UK's exports expensive to others and imports cheaper. As a result, the balance of trade will worsen, moving the current account balance to a deficit