International Finance

Question 10 (1 mark) What is the Impossible Trinity? It is not possible for a currency to have all three of; exchange rate stability, complete freedom of monetary flows across borders, and monetary independence Price transparency, price stability, low inflation Floating exchange rate, freedom of monetary flows, monetary independence Current account deficits, reduced currency risk, price competition Question 11 (1 mark) What is a potential conflict between domestic monetary and currency policy objectives and external policy objectives when a currency becomes a reserve currency known as? A problem A Triffin Paradox Impossible Trinity Current account deficit