The high foreign exchange value of the U.S dollar in the early 1980s can best be explained by ?
Correct answer: A. additional investment funds made available from overseas
- A. additional investment funds made available from overseas
- B. lack of investor confidence in U.S fiscal policy
- C. market expectations of rising inflation in the United States
- D. American tourists overseas finding costs increasing
Explanation
The strong dollar in the early 1980s was supported by large foreign capital inflows into U.S. investments, which increased demand for dollars. Expectations of rising U.S. inflation would instead tend to weaken the dollar.
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