From 1970 to 1998 the U.S.dollar
A)gained value compared to the Italian lira because inflation was higher in the U.S.
B)gained value compared to the Italian lira because inflation was lower in the U.S.
C)lost value compared to the Italian lira because inflation was higher in the U.S.
D)lost value compared to the Italian lira because inflation was lower in the U.S.

Question

Quizplus · Accepted Answer

A stronger currency is characterized by lower inflation rate. Since the U.S. had lower inflation rate than Italy during the period from 1970 to 1998, the value of the U.S. dollar gained strength compared to the Italian lira. Therefore, choice B is the correct answer.