Author Question: Explain the basic macroeconomic policy trilemma for open economies. What will be an ideal ... (Read 40 times)

fagboi · **on:** Jun 30, 2018

Explain the basic macroeconomic policy trilemma for open economies.

What will be an ideal response?

Question 2

Which of the following is TRUE about exchange rates?

A) They should not be volatile because they will determine the economic climate.
B) They are generally more volatile than stock prices.
C) They are more volatile than several underlying factors that move them such as money supplies and fiscal variables.
D) They should be volatile because to correct price signals they adjust quickly in response to economic news, but they are generally less volatile than stock prices.
E) They never overreact to economic news.

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

Answer to Question 1

Of three goals most countries shareindependence in monetary policy, stability in the exchange rate, and the free movement of capitalonly two can be reached simultaneously.

Answer to Question 2

D