Q. Which of the following is/are part of impossible trinity or the trilemma?
1.Independent monetary policy
2.Fixed exchange rate
3.Free flow of capital across borders
4.Rise in Non-Performing Assets.
Select the correct answer from the codes given below;
Answer: D
Notes:
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.
According to economists, any economy can choose to pursue only two out of the three policy options noted above simultaneously in the long-run.
Source: The Hindu
