Which of the following is one component of the "trilemma" that is faced by policy makers in choosing monetary arrangements?
A) monetary policy oriented towards domestic goals
B) exchange rate instability
C) tariffs and subsidies
D) restrictions on the migration of labor
E) global inflation

Question

Quizplus · Accepted Answer

The "trilemma" in international economics, also known as the "impossible trinity," states that it is impossible to have all three of the following at the same time: a fixed foreign exchange rate, free capital movement, and an independent monetary policy. A policy oriented towards domestic goals is one component of this trilemma, as it represents the challenge of maintaining an independent monetary policy while trying to manage capital mobility and a fixed exchange rate.

Which of the Following Is One Component of the "Trilemma