Question

The "unholy trinity," "impossible trinity," or the "policy Trilemma" are all synonyms for the concept that a country must choose two of three monetary policy goals, but it can never have all three. For the following countries identify what two policy goals their current (last 20 years) monetary policy reflects and explain your reasoning: U.S., China, and France .

Answer 1

US - In US we pick first two unholy Trinity , impossible Trinity because any Americans can invest abroad,simply by sending cash to an international mutual fund and foreigners are free to buy stock and bonds on domestic exchange.Moreover the federal reserve set monetary policy to try to maintain full employment and price stability.

China- China has choosen a different response to the trilemmas. It's central bank conduct monetary policy and maintain tight control over the exchange value of it's currency.But to accomplish these two goals,it has to restrict the international flow of capital,incl inclu the ability of Chinese citizen to move their wealth abroad. Without such restrictions,money will flow into and out of country, forcing the domestic interest rate to match those set by foreign central bank.

France- The France chose policy tripemmt and unholy trilemma because France have no personal policy of their nation as they follow European policy in their economy.