What Is the Nature of the Trilemma That Is Encountered

question 122

Multiple Choice

What is the nature of the trilemma that is encountered when choosing monetary arrangements?

• A) Only two of the three aspects of internal and external balance can be accommodated simultaneously.
• B) Only three of the four aspects of internal and external balance can be accommodated simultaneously.
• C) Only one of the three aspects of internal and external balance can be accommodated simultaneously.
• D) Only two of the four aspects of internal and external balance can be accommodated simultaneously.
• E) Only one of the four aspects of internal and external balance can be accommodated simultaneously.

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Definitions:

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Banking Crisis

A financial situation where banks face significant liquidity or solvency issues, leading to a lack of confidence and potential failure or government intervention.

Subprime Mortgages

Loans offered to individuals with poor credit scores at higher interest rates than conventional mortgages, contributing to the 2008 financial crisis.