the Administration and the Federal Reserve recognized that something had to be done to lower the level of the US dollar in international currency exchange. Agreements on loosely coordinated actions were reached with the other major western industrial countries, and, by early 1986, the value of the dollar in international currency exchange had dropped significantly. Since that time, the dollar has alter natively gained and lost strength; however, it has never 4returned to the levels (the high currency exchange values) of the early 1980s.
The the primary contributing factors to the increase in value of the dollar in foreign currency exchange from 1980 to 1984 were differential rates of inflation and differential changes in real interest rates between the US and the other industrial countries. Changes in the domestic money supply in the United States affects both the rate of inflation and real interest rates in the country, and, by extension, the differen tial rates of inflation and differential changes in r
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