In the mid to late 1970s, the Japanese Yen appreciated relative to the USD even though Japanese inflation rate was higher than US inflation. Please discuss and explain the reasons for this anomaly. Discuss how a persistent U.S. balance of payments deficits might lead to world inflation.

Economics: Private and Public Choice (MindTap Course List)
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Chapter19: International Finance And The Foreign Exchange Market
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In the mid to late 1970s, the Japanese Yen appreciated relative to the USD even though
Japanese inflation rate was higher than US inflation. Please discuss and explain the reasons
for this anomaly. Discuss how a persistent U.S. balance of payments deficits might lead to
world inflation.

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