Author Question: What is the policy trilemma? What will be an ideal response?[br][br][b][color=gray]Question ... (Read 42 times)

dbose · **on:** Jun 30, 2018

What is the policy trilemma?

What will be an ideal response?

Question 2

Holdings of partially finished components involve inventories of ________.

A) Tobin's q
B) work in process
C) production smoothing
D) stock-out components

upturnedfurball · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

The policy trilemma is the hypothesis that it is impossible for a country to have exchange rate stability, monetary policy independence, and free capital flows at the same time. If countries have free capital flows and an independent monetary policy, they must let the exchange rate float. If countries have free capital flows and exchange rate stability, they must give up monetary policy independence. If countries have monetary policy independence and exchange rate stability, they must restrict the flow of capital.

Answer to Question 2

B