2020 IB Extended Essays

The 8,7% increase of Turkey’s exports demonstrate a rise in demand for Turkish Lira, hence the demand curve to shifts right from 1 to 2 as seen in Figure 7. The graph showcases the value of Turkish Lira in terms of US dollars. The rise in demand has led to an increase in output from 1 to 2 , showcasing an increase in the amount of USD, 1 Turkish Lira can purchase. This can also be seen as the price increases from 1 to 2 . This price increase can also be recognised in Figure 8 (Trading Economics, 2018) as the value of TL increased against the US after September, as 1USD = 6.5TL fell to 1USD = 5.5TL, ceteris paribus. (Jocelyn Blink, 2012) When a country uses monetary policy, this directly impacts the supply and demand of money and therefore, the 7.25% increase in Turkish interest rates would subtract money from the economy which would lower the amount of TL flowing the economy hence, decreasing supply. (Economics Beta, 2016) The impacts of this result can be seen in Figure 9 below.

9