Which of the following is related to the Trilemma?
A) capital flows.
B) the exchange rates.
C) independent monetary policy.
D) all of the above
E) b and c only

Question

Quizplus · Accepted Answer

1. Free capital flows (unrestricted movement of capital in and out of the country).
2. A fixed exchange rate (the value of the currency is pegged to another currency or basket of currencies).
3. An independent monetary policy (the ability to set interest rates and control the money supply to manage the economy).
Therefore, the correct answer to the question is:
d. all of the above
Countries must choose between these three options, typically opting for two and sacrificing the third. For example, if a country wants to have free capital flows and an independent monetary policy, it must allow its exchange rate to float. If it wants to have a fixed exchange rate and free capital flows, it cannot have an independent monetary policy, and so on.

Which of the Following Is Related to the Trilemma