The argument that it is not possible to have simultaneously a fixed exchange rate,a free flow of capital and an independent monetary system is referred to as the ____________.
A)adjustment mechanism
B)special role of the dollar
C)impossible trinity argument
D)distensible monetary system

Question

Quizplus · Accepted Answer

The argument that it is not possible to have a fixed exchange rate, free capital flow, and independent monetary policy is known as the impossible trinity argument. Therefore, option C is the correct answer. Option A is incorrect because the adjustment mechanism is related to the balance of payments, not the impossible trinity argument. Option B is incorrect because the special role of the dollar is not related to the impossible trinity argument. Option D is incorrect because there is no such thing as a distensible monetary system.

The Argument That It Is Not Possible to Have Simultaneously