The appreciation in the value of the dollar in the early 1980s is explained by all of the following except ?
Correct answer: D. relatively high inflation rates in the United States
- A. the United States being considered a safe haven by foreign investors
- B. relatively high real interest rates in the United States
- C. confidence of foreign investors in the U.S economy
- D. relatively high inflation rates in the United States
Explanation
High U.S. inflation reduces the dollar's purchasing power and normally puts downward pressure on its exchange value. Safe-haven status, high real interest rates, and investor confidence could instead support dollar appreciation.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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