Economics class: Turkey’s lira tumbles after central bank cuts rates

This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.

Specification:

Click to read the article below and then answer the questions:

Turkey’s lira tumbles after central bank cuts rates

• Why would an inflation rate of over 20% suggest the opposite decision to that taken by the Turkish central bank?

• Explain why a negative real rate of interest will put downward pressure on a nation’s exchange rate

• How can a weakening currency lead to further inflationary pressure?

• Explain how central bank independence can promote economic stability

David Dike, Economic Research Council — Economic Episodes

Economics class: Turkey’s lira tumbles after central bank cuts rates
Pinoy Variant