Ex Nihilo Dutluk: When unemployment in the USA increases, for example, investors in other countries begin to expect the Fed to cut interest rates. This typically leads to an increase in short-term financial capital flowing into emerging market economies, causing the national currencies of these countries to appreciate against the US dollar. This appreciation, in turn, affects international competitiveness of these countries negatively, and lowers their exports. As a result, unemployment among workers in the export sectors of emerging economies may increase, pushing down their living standards.

When unemployment in the USA increases, for example, investors in other countries begin to expect the Fed to cut interest rates. This typically leads to an increase in short-term financial capital flowing into emerging market economies, causing the national currencies of these countries to appreciate against the US dollar. This appreciation, in turn, affects international competitiveness of these countries negatively, and lowers their exports. As a result, unemployment among workers in the export sectors of emerging economies may increase, pushing down their living standards.

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Introduction to Economics I Ahmet Tiryaki

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Ex Nihilo Dutluk