The Authors Discuss the Concept of the "Impossible Trinity" or the Inability

question 27

Multiple Choice

The authors discuss the concept of the "Impossible Trinity" or the inability to achieve simultaneously the goals of exchange rate stability, full financial integration, and monetary independence. If a country chooses to have a pure float exchange rate regime, which two of the three goals is a country most able to achieve?

• A)Monetary independence and exchange rate stability.
• B)Exchange rate stability and full financial integration.
• C)Full financial integration and monetary independence.
• D)A country cannot attain any of the exchange rate goals with a pure float exchange rate regime.

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Definitions:

Depressed

A state characterized by feelings of severe despondency and dejection, often with a lack of energy and difficulty in maintaining interest in life.

Attributions

Explanations for behaviors or events, including the assignment of causes or reasons for outcomes.

Stable

A condition or state that is not easily changed or likely to change, indicating reliability or consistency.

Global

Relating to or embracing the whole of something, or of the earth; worldwide.