Macroeconomic policy makers seek to achieve three goals: (1) Open a country\'s e

Question

Macroeconomic policy makers seek to achieve three goals: (1) Open a country's economy to flows of capital in an international setting (2) Produce a stable economy via monetary policy (3) Ensure a stable currency exchange rate. What is the trilemma they face? Only two can hold Only one can hold The goals are unrealistic Monetary policy doesn't apply in international settings Which of the three goals has the U.S historically followed? (1) (2) (3) (1) & (2) (2) & (3) (1) & (3) (All of the Above)

Explanation / Answer

1. According to the IMPOSSIBLE TRINITY only two of the above mentioned policies can be holded at a same time. So the answer will be a. Only two can hold.

2. 2&3.

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