Which of the following are constituents of the trilemma of international finance? A. Fixed exchange…
The Trilemma of International Finance (also known as the Mundell-Fleming Impossible Trinity) states that an open economy cannot simultaneously maintain all three of the…
Choose your answer
Which of the following are constituents of the trilemma of international finance?
A. Fixed exchange rate
B. Independent monetary policy
C. Free mobility of capital
D. Global recessionary tendency E Rising inflationary conditions
Answer and explanation
Correct answer A
The Trilemma of International Finance (also known as the Mundell-Fleming Impossible Trinity) states that an open economy cannot simultaneously maintain all three of the following policy objectives: a fixed exchange rate (A), an independent monetary policy (B), and free cross-border mobility of capital (C).
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UGC NET Commerce