3. The impossible trinity Suppose the government of Iraq is deciding what kind of monetary policy and exchange rate regime to choose. The government wants to ensure stability in international trade and investment by pegging the Iraqi dinar to the U.S. dollar. Which of the following policy choices will achieve this goal? Check all that apply. Foregoing monetary policy autonomy without imposing capital controls Controlling the interest rate in the country and imposing restrictions on foreign exchange trading Maintaining capital controls with no independent monetary policy

Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:William J. Baumol, Alan S. Blinder
Chapter19: The International Monetary System: Order Or Disorder
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3. The impossible trinity
Suppose the government of Iraq is deciding what kind of monetary policy and exchange rate regime to choose. The government wants to ensure
stability in international trade and investment by pegging the Iraqi dinar to the U.S. dollar.
Which of the following policy choices will achieve this goal? Check all that apply.
Foregoing monetary policy autonomy without imposing capital controls
Controlling the interest rate in the country and imposing restrictions on foreign exchange trading
Maintaining capital controls with no independent monetary policy
Transcribed Image Text:3. The impossible trinity Suppose the government of Iraq is deciding what kind of monetary policy and exchange rate regime to choose. The government wants to ensure stability in international trade and investment by pegging the Iraqi dinar to the U.S. dollar. Which of the following policy choices will achieve this goal? Check all that apply. Foregoing monetary policy autonomy without imposing capital controls Controlling the interest rate in the country and imposing restrictions on foreign exchange trading Maintaining capital controls with no independent monetary policy
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