KPDS 2003-1 Soru=96

It is pointed out in the passage that the American policy, in the 1990s, for a strong dollar __________.

The long-expected decline in the dollar is now well under way. For
years economists have predicted that America's huge currentaccount
deficit would eventually cause its currency to plunge. So far
the dollar's slide has been fairly gradual: it is down by 13% in tradeweighted
terms over the past year, though it has dropped by almost
twice as much against the euro since its 2001 peak. As the decline
seemed to pick up speed this week, John Snow, George Bush's
Treasury Secretary, declared that he favours a "strong dollar
policy". That was surely the wrong answer, even leaving aside the
debatable issue of whether cabinet secretaries can influence the
level of exchange rates. A weaker, not a stronger dollar, is what the
world needs now-so long as policymakers elsewhere respond
appropriately. America promoted a strong dollar throughout the
1990s, when inflation was still thought to be the main enemy. Today
it makes less sense. Even after its recent slide, the dollar seems
overvalued. Moreover, with ample space capacity in America,
deflation looks a bigger risk than inflation.