U.S.macroeconomic policies of the early 1980s included a very ________ monetary policy that was largely responsible for the huge ________ of the dollar in 1980-1985.

Question

Quizplus · Accepted Answer

A tight monetary policy involves high interest rates and a reduction of the money supply, which can lead to appreciation of the currency due to increased demand for it. This is exactly what happened in the early 1980s in the U.S., as the Federal Reserve implemented a tight monetary policy to combat high inflation. As a result, the value of the U.S. dollar appreciated significantly against other currencies.

USMacroeconomic Policies of the Early 1980s Included a Very ________