According to the trilemma, as a nation moves toward more open, liberalized capital markets, a stable policy configuration requires that policymakers forego either:

Question

Quizplus · Accepted Answer

As per the trilemma, a nation cannot have all three – free capital mobility, a fixed exchange rate, and monetary policy independence. So, as a nation moves towards open, liberalized capital markets, policymakers would have to give up either monetary policy independence or pegged exchange rates. Therefore, the best choice is option B.

According to the Trilemma, as a Nation Moves Toward More