Hot money flows
What Hot money flows means in Economics A-Level, as defined for AQA.
Definitions of Hot money flows
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Reference: AQA
Short-term speculative capital attracted into the UK when higher interest rates give savers and foreign investors a higher return on sterling deposits.
Short-term flows from foreign investors seeking higher returns, attracted by raising interest rates.
Short-term, speculative capital flows that move rapidly between countries in response to interest rate differentials, exchange rate expectations, or changes in investor sentiment. They are highly volatile and can reverse quickly, creating macroeconomic instability.
Topics that use Hot money flows
- Central banks and monetary policy (AQA A-Level)
- Exchange rate systems (AQA A-Level)
- The balance of payments (AQA A-Level)
Related terms
- Balance of payments
- Exchange rates
- International trade
- Aggregate demand
- Appreciation
- Asymmetric economic shock
- Capital account
- Competitiveness
Using Hot money flows in the exam
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