New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    The impossible trinity is a concept in international

    economics which states that it is impossible to have all three of the following at the same time I. Fixed Exchange Rate II. Flexible Exchange Rate III. Independent Fiscal Policy IV. Independent Monetary Policy V. Perfect Capital Mobility
    A I, III and V Correct Answer Incorrect Answer
    B II, IV and V Correct Answer Incorrect Answer
    C I, II and V Correct Answer Incorrect Answer
    D None of the above Correct Answer Incorrect Answer

    Solution

    The impossible trinity, or the trilemma, refers to the idea that an economy cannot pursue independent monetary policy, maintain a fixed exchange rate, and allow the free flow of capital across its borders at the same time.

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