Economics class: Turkey’s lira tumbles after central bank cuts rates
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This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.
Monetary policy, Inflation, Exchange rates
Click to read the article below and then answer the questions:
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
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