The trilemma can be visualized using a triangle in which the three sides involve: giving up an independent monetary policy; a floating exchange rate regime; and capital controls that restrain movements of financial capital.

Question

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The trilemma, or "impossible trinity," involves three policy goals: a fixed exchange rate, an independent monetary policy, and free capital movement. It states that a country can only achieve two of these three simultaneously, not all three.

The Trilemma Can Be Visualized Using a Triangle in Which