Low interest rates means low inflation which means depreciated currency. This stimulates businessmen to invest abroad as interest rates are low. How can they invest abroad if the currency is depreciated? Wouldn't that be illogical and unfeasible? (According to Mankiw's textbook)Lower Interest rates encourage additional investment spending, which gives the economy a boost in times of slow economic growth. (Investopedia) Is this talking about investment spending abroad or investment spending in general? If Investment abroad increases how can that boost the economy? Aren't those statements contradictory?Recently, Turkey has experienced high inflation and high interest rates. IN spite of that its currency depreciated at historical levels. Is this because of other reasons than high inflation and high interest rates? Do we normally assume "ceteris paribus" when talking about this correlation? Even though its currency depreciated, there were investments made in Turkey. Why?

Question

Low interest rates means low inflation which means depreciated currency. This stimulates businessmen to invest abroad as interest rates are low. How can they invest abroad if the currency is depreciated? Wouldn't that be illogical and unfeasible? (According to Mankiw's textbook)

Lower Interest rates encourage additional investment spending, which gives the economy a boost in times of slow economic growth. (Investopedia) Is this talking about investment spending abroad or investment spending in general? If Investment abroad increases how can that boost the economy? Aren't those statements contradictory?

Recently, Turkey has experienced high inflation and high interest rates. IN spite of that its currency depreciated at historical levels. Is this because of other reasons than high inflation and high interest rates? Do we normally assume "ceteris paribus" when talking about this correlation? Even though its currency depreciated, there were investments made in Turkey. Why?

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Economics

Related Economics Q&A

Find answers to questions asked by students like you.

Q: Let’s say that Marianne is a politician who promises cheaper gasoline for everyone in the country if...

A: From the aforementioned question, it can be stated that Marianne is one of the politicians who are c...

Q: You are a profit-maximizing firm. Suppose there are two types of customers (50% of 1 type, 50% of th...

A: We are given:Price for coat and a pair of pants for consumers of type RPrice for coat = $80Price of ...

Q: Let’s apply the general equilibrium set up to discuss the on-going trade war between the U.S. and Ch...

A: General equilibrium (GE) theory mainly focuses on determining the behavior of demand (D), supply (S)...

Q: PepsiPepsi and CokeCoke are considered to be substitutesubstitute goods.Use the line drawing tool to...

A: Substitute goods are the goods that can be used in place of each other. For example, Linux and Windo...

Q: 27. Which are functions of the Federal Reserve System?   I. conducting monetary policy II. examini...

A: Federal Reserve is the central bank of United States. It is the apex bank and the regulator of finan...

Q: Given the macro economic data below, draw a graph to illustrate if there is arecessionary gap in the...

A: a.)Recessionary gap:Equilibrium GDP can be calculated as follows:

Q: If a country with floating exchange rates uses an expansionary monetary policy, the domestic interes...

A: Exchange rate between two currencies gives the value of one currency in terms of the other.Floating ...

Q: Monopoly HW B MC 16 14 - 12 - 10 ATC AUC 8 = 6 c 4 2 10 20 30 40 S0 60 70 80 90 100 1о 120 ldentify ...

A: In the aforementioned diagram, the downward sloping demand curve (D) and the marginal revenue (MR) c...

Q: A monopolist has a demand for its product that is P = A + BQ . It has no fixed costs. Marginal cost ...

A: The given information: Demand function is represented as follows: P = 315 – 8Q                      ...

Q: Q3 O Qi Total revenue O Q2 all quantities beyond Q1 Total cost Where on the graph does the firm earn...

A: Since, the first question is not complete. So, I am solving second and third part.

Q: Multiple Definition of economics

A: There are several definitions of Economics given over time. We have covered the most important ones ...

Q: The Federal Reserve has direct control over A) the monetary base. B) M1. C) M2. D) checkable deposit...

A: The correct option is A.

Q: The graph shows the aggregate demand (AD) curve and the long-run aggregate supply (LRAS) curve for a...

A: Increase in human capital:If Human capital of workers increase in an economy, then the long-run aggr...

Q: Cost and revenue The graph presents the short-run costs and revenue for a monopolistically competiti...

A: Monopolistically competitive market: Monopolistic market refers to the market structure in which the...

Q: The amount of a good or a service that a producer supplies at a specific price is called:

A: Let us first understand certain concepts related to the above question.Producer: Producers are the e...

Q: What is the equal-payment series for 10 years that is equivalent to a payment series starting with $...

A: The first step is to compute the total present value of cashflows for 10 years which is decreasing e...

Q: The Fed has increased the target rate of the federal funds rate nine times since December 2015.  An ...

A: The federal funds rate refers to the interest rate that one commercial bank charge other commercial ...

Q: Will not change AD Increases AD Decreases AD Answer Bank a reduction in government spending increase...

A: Click to see the answer

Q: explain what would happen to the ecomony if velocity is reduced sigificantly.   explain why FED chai...

A: Since we are entitled to answer one question per request, we would be answering the 1st question. If...

Q: Do I have this queshtion right I think its positive. I'm not sure if I'm correct.

A:   Economic growth.From the given graph, if these countries have gross government debt is excess of 8...

Q: 1. Which groups benefitted the most from China imposing an export quota on rare earth metals? Did it...

A: Rare earth metals are made up of 17 chemical elements that are useful in manufacturing many high-tec...

Q: Suppose a huge scientific breakthrough doubles the output that an additional houra huge scientific ...

A: Production function:Production function depicts the relationship between the total output produced a...

Q: 12. (Table: Labor Force Data) Using the data from the table Labor Force Data, suppose the labor fo...

A: Let us first define some concepts related to labor force participation rate.Labor force: In an econo...

Q: Which of the following are true of an economy operating with a negative GDP gap? Check all that appl...

A: Gross Domestic Product (GDP at MP): This is the gross market value of all the final commodities gene...

Q: explain IET(International Economic Transactions) cycles as a factor modifying the limits of state re...

A: STEP 1In economics, the term IET (International Economic Transactions) refers to the transfer of com...

Q: Amazon initially selected two locations for US headquarters-NYC and Northern Virginia. It recently w...

A: The United States follows a mixed economy system where the role of government is limited and it inte...

Q: loui's preferences over pizza (x) and other goods (y) are given by U(X,Y)=XY^2, with associated marg...

A: A utility function u (x, y) represents a consumer’s preferences. That is, a utility function provide...

Q: Additional questions:Supposed you and your friends decide to rent the four bedroom apartment and sub...

A: Part -1.Average Fixed cost per roommate will be computed after arriving at Total fixed cost which is...

Q: If a natural disaster occurs in the US, this is an example of a A) stone cold shock B) negative aggr...

A: A natural disaster is very likely to destroy resources like capital and human resources.

Q: 2013 Output 2013 Prices 2014 Output 2014 Prices Lemonade 200 glasses $1 per glass 22...

A: 29.Real GDP:2013 real GDP can be calculated as follows:

Q: Can you explain rational expectations in detail and elaborate Keynesian and Chicago points of views ...

A: Rational Expectations was first introduced by John F. Muth. Rational Expectations is an economic ter...

Q: The Federal Budget Ask FRED ALFRED I The accompanying graph contains data on U.S. federal government...

A: As can be seen from the graph, spending as a percent of GDP for year 2016 is 38%

Q: At an interest rate of 10%, what is the present value of an asset that produces $1,000 a year in per...

A: Suppose that you own a perpetual asset that promises to pay you $1000 a year with a 10% return is . ...

Q: A commercial bank will become illiquid if A) it has short-term liabilities that exceed its short-ter...

A: Click to see the answer

Q: In​ Korea, real GDP per hour of labor is​ $22, the real wage rate is​ $15 per​ hour, and people work...

A: Korean marketThe given information:Real GDP per hour of labor is $22The real wage rate is $15 per ho...

Q: A profit-maximizing firm incurs an economic loss of $30,000 per year. Its fixed cost is $25,000 a ye...

A: It is given that, a profit-optimizing firm incurs an economic loss (EL) of $30,000 per year and has ...

Q: What is the “Law of Demand”? How does it relate to the Slutsky equation?

A: Demand of a good or service refers to the different combinations of prices and output that consumers...

Q: not sure hot to get to final answer

A: Part1.The Effect of valentines's day is the change in demand for roses. The demand for roses has ris...

Q: Donna and Jim are two consumers purchasing strawberries and chocolate. Jim’s utility function is U(x...

A: MUx (for Jim) = y MUy (for Jim) = xPx = $2     and  Py = $4   ( as given in another subpart of quest...

Q: If the MPC is 0.8 and government spending decreases by $50 million, then equilibrium GDP will decrea...

A: The equilibrium GDP:The equilibrium GDP can be calculated as follows:

Q: Draw the supply and demand curves based on the following schedules.Price Quantity Demanded Quantity ...

A: 1.By following the aforementioned demand and supply schedules, it is crucial to determine the market...

Q: How would you solve these

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and s...

Q: 31. (Table: Present Value of Projects A, B, C, and D) Examine the table Present Value of Projects ...

A: This is a Finance question and should have been posted under Finance and not Economics. Please make ...

Q: Briefly state and evaluate the problem of time lags in enacting and applying fiscal policy. How migh...

A: Fiscal Policy:Fiscal policy is the tool of government through which it maintains the economy of a co...

Q: Suppose the consumer’s utility function is given by U(x,y) = x2/4y3/4where The equation for this co...

A: Utility: The utility is the power or ability of the commodity to satisfy the consumers’ want. Altern...

Q: All of the following impact (shift) the short-run aggregate supply curve EXCEPTtechnological innovat...

A: In the short run, the factors that lead to a change in the aggregate supply curve are,change in wage...

Q: 6. Two copies of a contract were mailed to Los Angeles. One was sent Air Mail; the other First Class...

A: Given information:Probability of air mail letter arriving in 2 days is P (A) = 0.65    Probability o...

Q: The tables show the spending and revenue for Littleland in 2010. Use the tables and other informatio...

A: Little land Borrow:Little land Borrow can be calculated as follows:

Q: Donna and Jim are two consumers purchasing strawberries and chocolate. Jim’s utility function is U(x...

A: Budget constraint is given below.

Q: Solow Growth Model    Why are these the right answers? See image.

A: From the questions, part a, this working is a short term phenomena and the increase in K will push t...