The Macroeconomic Policy Trilemma Regarding Exchange Rate Policies Is That

question 26

Multiple Choice

The macroeconomic policy trilemma regarding exchange rate policies is that monetary authorities

• A) cannot pursue independent monetary policy while maintaining fixed exchange rates and allowing free capital movement.
• B) maintain fixed exchange rates while pursuing an independent monetary policy and allowing free capital movement.
• C) allow free capital movement while pursuing an independent monetary policy and maintaining fixed exchange rates.
• D) all of the above.
• E) none of the above.

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