1: Selling or buying foreign currencies: This is a common tactic employed by central

banks worldwide. By selling foreign currencies like US dollars, the central bank can
increase the supply of lira in the market, putting downward pressure on its value and
preventing excessive appreciation. Conversely, buying foreign currencies reduces the
lira supply and strengthens its value against other currencies, mitigating depreciation

2: The Turkish government has a strong incentive to prevent a significant depreciation

of the Turkish lira (TRY) against major currencies like the US dollar (USD). Two key
reasons underpin this stance:

1. Impact on Inflation and Public Perception:

● Fueling Inflation: A falling TRY makes imports more expensive, pushing up

domestic prices and exacerbating already high inflation levels. This
disproportionately affects the working class and erodes people's purchasing
power, leading to discontent and potential social unrest.
● Government Perception: The government's popularity is often tied to economic
stability. High inflation, fueled by currency depreciation, can dent public
confidence and negatively impact electoral prospects. Maintaining a stable TRY
helps project an image of economic competence and control.

2. Debt Repayment and Financial Instability:

● Exacerbating Existing Debt: Turkey has a significant amount of foreign currency

debt. A weaker TRY would increase the burden of servicing this debt, potentially
leading to defaults and financial instability.
● Capital Flight and Increased Interest Rates: A sharp currency depreciation could
trigger capital flight as investors seek safe havens for their assets. This would
further weaken the TRY and force the central bank to raise interest rates to
attract new capital, potentially stifling economic growth.

Conclusion:

In conclusion, the Turkish government has a vested interest in maintaining a stable

exchange rate for the TRY. Failing to do so could trigger a dangerous spiral of inflation,
social unrest, and financial instability, jeopardizing both the economy and the
government's political standing. Therefore, managing the exchange rate and preventing
significant depreciation remains a key policy priority.
Istanbul's single-use plastic bag dependency poses a significant environmental and
economic challenge. While tackling this issue necessitates multifaceted solutions, an
economic lens reveals key policy considerations and potential outcomes.

Market Failures and Externalities: Plastic bags, though seemingly insignificant, generate
negative externalities. Their environmental costs, from pollution to waste management
burdens, are borne by society, distorting the true price of consumption. The market, left
uncorrected, will continue to undervalue these costs, perpetuating overconsumption.

Policy Options and Incentives: Government intervention can address these market
failures through various avenues:

● Taxes and Bans: A Pigouvian tax, internalizing the environmental cost of plastic
bags, could incentivize consumers and businesses to switch to reusable
alternatives. Bans, while effective in reducing consumption directly, might face
resistance from producers and some consumers due to potential cost increases
and inconvenience.
● Subsidies and Investments: Promoting reusable bags through subsidies or public
investment in their production and distribution can counteract their higher initial
cost, lowering the barrier to entry for both businesses and consumers.

Impact on Efficiency and Welfare: Effective policies can improve economic efficiency by
aligning private consumption choices with social costs. Reduced plastic bag usage
translates to lower waste management expenses, cleaner environments, and potential
gains in tourism and public health. However, poorly designed policies could lead to
unintended consequences, such as job losses in the plastic bag industry, requiring
careful cost-benefit analysis and targeted compensation measures.

Behavioral Economics and Consumer Choice: Consumer preferences and habits play a
crucial role in the success of any policy. Understanding these through behavioral
economics can inform effective interventions. Nudges, like highlighting the social cost of
plastic bags or framing reusable bags as aspirational products, can influence consumer
choices without direct coercion.

Challenges and Uncertainty: Implementing successful policies requires overcoming

practical challenges like enforcement in informal markets and balancing competing
interests of stakeholders. The effectiveness of specific policies will depend on the
context, requiring continuous monitoring and adjustments based on empirical evidence.
Conclusion: Istanbul's plastic bag problem calls for an economic response that accounts
for market failures, externalities, and consumer behavior. Carefully designed policies,
combining taxes, subsidies, behavioral nudges, and investments in reusable
alternatives, can promote efficiency, reduce environmental harm, and ultimately improve
societal welfare. While uncertainties remain, a nuanced economic approach offers a
valuable framework for navigating this complex challenge and charting a path towards a
more sustainable Istanbul.

4: Istanbul, a jewel at the crossroads of Europe and Asia, embarks on an ambitious

journey with the construction of its third airport. This colossal project promises grandeur,
but economic reality dictates a cautious waltz between microeconomic gains and
macroeconomic risks. Understanding the interwoven scales of impact necessitates
considering the unique context of Turkey's economic aspirations and challenges.

Microeconomic Mosaic:

● Booming Bazaar: Construction, a symphony of clanging steel and buzzing

machinery, unleashes immediate job creation, benefiting engineers, laborers, and
local suppliers. Operational activity brings airlines, ground handling services, and
retailers into the fold, painting a vibrant picture of sustained economic growth
around the airport hub.
● Consumer Crescendo: Rising incomes from construction fuel the local demand
engine, benefiting nearby businesses and entrepreneurs like restaurant owners
and shopkeepers. Improved connectivity might unlock the allure of foreign
investment, diversifying the microeconomic landscape and attracting global
brands.

Landlord's Labyrinth: Spiraling land prices around the airport, a waltz for landowners,
might inflate real estate bubbles if not navigated with prudent regulations. Smaller
businesses, nestled amidst this economic boom, might face the crescendo of
competition from larger players, potentially leading to consolidation or closures unless
supported by targeted policies.

Macroeconomic Masterpiece:

● Growth Overture: The airport ignites Istanbul's potential as a global trade and
tourism hub, composing an overture of GDP growth. Improved connectivity
attracts foreign direct investment, amplifying the economic tempo and fostering
technological advancements.
 ● Taxation Tonic: Higher incomes and economic activity strengthen the
government's coffers through increased tax revenue, potentially funding social
safety nets like healthcare or education, or propelling future infrastructure
ventures.

Challenges and Discordance:

● Debt Dilemma: Borrowing for such a project, a tango with future generations,
could leave Turkey burdened with hefty financial obligations, limiting fiscal
flexibility and potentially crowding out investments in crucial sectors like
education.
● Investment Imbalance: The spotlight on the airport might cast a shadow on other
vital sectors, leading to a trade-off and neglecting investments in healthcare or
education, crucial for long-term development.
● Distributional Discordance: The economic benefits, like a discordant note, might
not reach everyone equally. Exacerbating existing income inequality could breed
social unrest if not addressed through targeted policies and investments in
human capital.

Weighing the Score:

Maximizing the success of this economic symphony hinges on several key measures:

● Project Efficiency: Avoiding cost overruns and ensuring efficient construction is

crucial to optimize positive impacts and prevent resource wastage.
● Skill Development: Equipping the local workforce with the skills to navigate the
new jobscape created by the airport is essential for inclusive growth and
preventing displacement.
● Sustainable Financing: Balancing immediate needs with long-term debt
sustainability through diversified funding sources avoids fiscal instability and
protects future generations' economic prospects.
● Distributional Equity: Implementing policies like infrastructure development in
underserved areas and targeted skills training ensures that all segments of
society benefit from the economic boom, preventing discordance and fostering
social cohesion.

Conclusion:

Istanbul's third airport, a testament to ambition and progress, demands a nuanced

evaluation through the lens of economic realities. While the microeconomic gains are
promising, the macroeconomic risks can't be ignored. Only by prioritizing project
efficiency, skill development, sustainable financing, and distributional equity can this
ambitious project truly take flight, transforming Istanbul into a beacon of inclusive and
sustainable economic prosperity, not just for itself, but for the wider region.