2020 IB Extended Essays

As seen in Figure 8, the use of contractionary monetary policy canalized economic units to saving. The lowered supply shifts output from “Q2 to Q1” ultimately increasing the value of the TRY in terms of USD from “P1 to P2”. This graph also represents Figure 8 as 1USD purchasing 6.5TL, fell to 5.5TL, demonstrating an appreciation in the Turkish Lira. Overall the decision to use contractionary monetary policy in order to appreciate the Turkish Lira was successful(ceteris paribus) as seen in the graphs and the data provided. However, it must be recognised that the analysis did not cover many external issues such as political dilemmas and other government policies.

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