Trilemma refers to policy conflicts among:
A) fixed exchange rate, monetary autonomy, and free capital mobility goals.
B) floating exchange rate, monetary autonomy, and free capital mobility goals.
C) fixed exchange rate, monetary autonomy, and floating exchange rate goals.
D) floating exchange rate, fiscal autonomy, and monetary autonomy goals.

Question

Quizplus · Accepted Answer

The trilemma refers to the policy conflicts that arise when a country tries to achieve all three of the following goals simultaneously: fixed exchange rate, monetary autonomy, and free capital mobility. A country cannot have all three goals at the same time because each goal cancels out the other two. Therefore, a country must choose only two of the three goals. In this case, the best choice is option A because it allows for a fixed exchange rate and monetary autonomy, which are both important for stabilizing the economy, while also allowing for some degree of free capital mobility.

Trilemma Refers to Policy Conflicts Among