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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