The strength of the U.S. dollar, as measured by the Real Broad Dollar Index (SOURCE: https://fred.stlouisfed.org/series/RTWEXBGSLinks to an external site.), has fluctuated over the past several years. Amid the COVID-19 pandemic, the index reached a recent trough of 103.35 in January 2021. The U.S. dollar index then climbed more or less consistently until peaking at 121.16 in October 2022--at the time, the highest level since publication began in January 2006. Since that peak, the index has reversed course somewhat, falling to 114.78 as of the latest measurement for February 2023.

• Why do you think the U.S. dollar strengthened so much in 2021 and 2022? Discuss the possible reasons and identify what you consider to be the most important factor for the dollar's appreciation over that period.
• What do you think fueled the decrease in the dollar's value since October 2022?
• From roughly 2011 to 2015, the index shows the dollar holding relatively constant at a value around 85 to 90. Do you think the more recent higher values for the Real Broad Dollar Index are likely to continue? Or will the index fall back to its levels in the early 2010s? Explain your reasoning.