Which of the following components come under the term lsquo Impossible Trinity rsquo in economics se...........

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Which of the following components come under the term ‘Impossible Trinity’ in economics seen in news?

1.Independent monetary policy

2.A fixed foreign exchange rate

3.Free movement of capital

4.Current Account Deficit

5.Budget deficit

Select the correct answer using the code given below:

1, 2 and 4 only

1, 2 and 3 only

3, 4 and 5 only

2, 3 and 5 only

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Explanation:

The correct option is 2: 1, 2, and 3 only.

The Impossible Trinity, also known as the Trilemma, states that it is impossible to have all three of the following at the same time: independent monetary policy, a fixed foreign exchange rate, and free movement of capital. Therefore, the correct combination includes options 1 (independent monetary policy), 2 (a fixed foreign exchange rate), and 3 (free movement of capital).