Question
According to the open-economy policy trilemma, which of the following arrangements are not sustainable? Select one: a.An economy such as Malaysia, which imposed capital controls
According to the open-economy policy trilemma, which of the following arrangements are not sustainable?
Select one:
a.An economy such as Malaysia, which imposed capital controls during the Asian crisis in order to enable its central bank to target both a stable exchange rate as well as pursue an independent monetary policy.
b.An economy such as Siam in the early 20thcentury, which pegged its currency to gold, thereby guaranteeing exchange rate stability and while retaining free capital flows to support development.
c.An economy such as China, which is undergoing a process of liberalizing its capital account, but will continue to rely on its large pool of reserves to maintain a fixed exchange rate to a basket of currencies, and use its domestic interest rate to stimulate the economy.
d.An economy such as Singapore, which has relinquished monetary policy autonomy for exchange rate stability, but chooses to run a large fiscal deficit.
e.An economy such as Japan, which allows free capital movements but routinely chooses to intervene in currency markets and engages in financial repression of its economy.
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