Social Sciences and History / Unit 14 SSH 1337 short lesson, about 20 seconds
Speculation, Returns, Inflation, PPP: Four Horizons
Captions available
The idea
In the extreme short run, speculation, self-fulfilling for a time. In the short run, rates of return: high real rates strengthen a currency. In the medium run, inflation: high-inflation countries see depreciation. Over many years, purchasing power parity, equal prices for traded goods.
In practice
Minutes, months, years, decades.
Where people slip
Central banks watch the rate for trade, banks and capital flows.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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