Which of the following three goals that make up the policy trilemma can be achieved at the same time in the eurozone countries?
A) exchange rate stability and free capital flows
B) monetary policy independence and exchange rate stability
C) free capital flows and monetary policy independence
D) exchange rate stability, free capital flows, and monetary policy independence

Question

Quizplus · Accepted Answer

Eurozone countries have adopted a common currency, the euro, which means they have exchange rate stability among themselves and allow for free capital flows. However, they cannot pursue independent monetary policies because monetary policy is set by the European Central Bank.

Which of the Following Three Goals That Make Up the Policy