The annual rate of inflation in Country X increases from 1.5% to 5.5%, while the average annual inflation rate of its main trading partners falls from 4.0% to 1.5%. Assuming exchange rates remain constant, all other things being equal, this change is most likely to lead to in the long term:
an improvement in Country X's international price competitiveness.
a decrease in leakages from Country X's circular flow of income.
a deterioration in Country X's current account balance.
an increase in injections into Country X's circular flow of income.
