What is the policy trilemma?
What will be an ideal response?
The policy trilemma is the hypothesis that it is impossible for a country to have exchange rate stability, monetary policy independence, and free capital flows at the same time. If countries have free capital flows and an independent monetary policy, they must let the exchange rate float. If countries have free capital flows and exchange rate stability, they must give up monetary policy independence. If countries have monetary policy independence and exchange rate stability, they must restrict the flow of capital.
You might also like to view...
What are the three externalities that are associated with driving cars and trucks?
Other things constant, which of the following would you expect to increase the output growth rate of a country?
What will be an ideal response?
The fact that individuals whose credit worthiness is less than it appears to be are those who are most willing to borrow funds at any given interest rate is an example of
A. moral bonuses. B. adverse selection. C. symmetric information. D. diverse origins.
Which of the following is a question answered with positive economic analysis?
A. Should the college provide more financial aid assistance? B. Should the college offer free parking for students? C. If the college increased tuition, will class size decline? D. Should the college cut tuition to stimulate enrollment?