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Which of the following elements is not part of the Impossible Trinity? Exchange rate stability Full...

  1. Which of the following elements is not part of the Impossible Trinity?
    1. Exchange rate stability
    2. Full financial integration
    3. The gold standard
    4. Monetary independence
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Answer #1

According to Impossible Trinity, there are three elements that the government may pursue, i.e. Fixed Foreign Exchange Movement, Free Capital Movement and independent monetary policy. However it is impossible to have all these factors simultaneously.

Thus the three parts in the above question, exchange rate stability, full financial integration (Free Capital Movement), and Monetary Independence are part of Impossible trinity.

But Gold standard is not a part of impossible trinity

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