The year 1985 saw progress on several important fronts. The American recovery entered its fourth year; inflation continued its impressive decline and interest rates fell significantly. Washington took a more constructive approach toward the resolution of international economic problems. In much of Europe, wage and price increases were further slowed, business profitability was improved, budget deficits were cut and cumbersome regulations were loosened. Japan took new steps to liberalize trade and finance. The United States joined with Britain, France, Japan and West Germany to reduce exchange rate misalignments and bring greater order to the international monetary system. Growth picked up in

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