A primary reason that explains the appreciation in the value of the U.S.dollar in the 1980s is
A) large trade surpluses for the United States.
B) relatively high inflation rates in the United States.
C) lack of investor confidence in the U.S. monetary policy.
D) relatively high interest rates in the United States.

Question

Quizplus · Accepted Answer

The relatively high interest rates in the United States attracted foreign investment, increasing demand for U.S. dollars and causing the currency to appreciate. Choice A is incorrect because trade surpluses would result in an increase in the supply of dollars, causing the currency to depreciate. Choice B is incorrect because high inflation would typically cause a currency to depreciate. Choice C lacks sufficient explanation and is also incorrect.

A Primary Reason That Explains the Appreciation in the Value