Economics · Monetary Policy & Exchange Rate Policy
When analyzing the external sector vulnerabilities of the Indian economy, the concept of the Impossible Trinity or the Trilemma is often cited. Which of the following combinations represents the policy choice currently maintained by the Reserve Bank of India in its management of the Indian rupee and capital accounts?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Unlimited foreign institutional investment in all sectors, a currency pegged to gold, and a monetary policy following the US Federal Reserve.
- 2A completely closed economy with no foreign trade, a fixed exchange rate determined by parliament, and monetary policy dictated by the Ministry of Finance.
- 3A managed floating exchange rate, an independent monetary policy, and a partially open capital account with specific macroprudential controls.✓
- 4Full capital account convertibility, a fixed exchange rate, and an independent monetary policy focused entirely on price stability.
Correct answer
A managed floating exchange rate, an independent monetary policy, and a partially open capital account with specific macroprudential controls.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Monetary Policy & Exchange Rate Policy MCQs →Want more practice questions on Monetary Policy & Exchange Rate Policy?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Monetary Policy & Exchange Rate Policy