Question

After reading all Lesson 8 materials, research an international news source regarding the Lebanese lira to understand Lebanon's currency crisis over the past month! Then, answer the following questions, showing evidence of understanding Lesson 8 content:

1. What happened in Lebanon to create the currency crisis?
2. What does the fall in the lira mean for international firms employing workers and producing goods there?
3. What is the lira's effect on Lebanese exports and imports?
Use citations and provide references

Answer 1

The currency crisis in Lebanon was caused by high government debt, political instability, and a decrease in foreign currency reserves. The fall in the lira has negative implications for international firms employing workers and producing goods in Lebanon. The depreciation of the lira also affects Lebanese exports and imports.

Step-by-step explanation:

The currency crisis in Lebanon was caused by a combination of factors such as high government debt, political instability, and a decrease in foreign currency reserves. The supply of Lebanese lira increased while the demand for it decreased, leading to its depreciation.

The fall in the lira has negative implications for international firms employing workers and producing goods in Lebanon. It becomes more expensive for these firms to import raw materials and pay salaries in foreign currency, which can lead to decreased profitability and potential downsizing.

The depreciation of the lira also affects Lebanese exports and imports. While it makes Lebanese goods cheaper for foreign buyers, it makes imports more expensive for Lebanese consumers, leading to higher prices and potentially reducing the competitiveness of Lebanese industries.