The fall in the value of the U.S.dollar between 1985 and 1988 was caused by:
A) the economic growth in the developed countries of Europe.
B) a fall in prices of exported U.S. goods.
C) a trade surplus in the U.S. during the previous years.
D) a combination of government intervention and market forces.
E) the protectionism measures adopted by the European countries.

Question

Quizplus · Accepted Answer

The fall in the value of the U.S. dollar between 1985 and 1988 was caused by a combination of government intervention and market forces. The U.S. government intervened by negotiating the Plaza Accord with major economic powers to devalue the dollar, which led to a decrease in demand for the currency. Market forces also played a role as investors shifted away from the dollar due to concerns about U.S. trade deficits and inflation.

The Fall in the Value of the U