Higher interest rate to borrow money less purchases, slowed economy. Convince people that inflation is over = long-term policy: loose fiscal policy to stimulate economic growth (reagen) Exchange rate decrease will solve trade problems: was this a ploy, or genuine bureaucratic struggle (federal. The accords: the plaza accord: sept 1985, finance ministers from the g5: us, japan, britain, west germany, France (main economies of imf: coordination of domestic policies needed. Explaining japan"s cooperation: system-level, japan"s post-war economic strategy. Encouraged by us (access to market), focus on export, fixed low exchange rate: but now trade balance with the us causing friction. Trade surplus japan had with us was very large. Us recession because of low exchange rates. Problem with economy based on policy: potential yen-dollar rivalry, if yen rose too high. Like having yen to be undervalued, don"t want it to be an international currency. Harder for central bank to manage currency: domestic-level, decades of export-oriented growth.