Which of the Following Is Not a Part of the "Impossible

question 10

Multiple Choice

Which of the following is not a part of the "impossible trinity"?

• A) Independent monetary policy
• B) Free capital flows
• C) Floating exchange rate
• D) Fixed exchange rate

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Definitions:

Automatic Stabilizers

Economic measures and initiatives, like taxation and unemployment insurance, that naturally adapt to mitigate the effects of economic changes without direct action from the government.

Discretionary Fiscal Policy

Changes in government spending and taxes to promote full employment, price stability, and economic growth.

Fiscal Policy

Governmental use of spending and taxation to influence the economy.

Government Spending

Expenditures by the government for its operations, programs, and debt payments, which can influence the economy's overall performance.