List and explain the three attributes (often referred as the impossible trinity) an ideal currency would possess if existed in today's world
What will be an ideal response?
Answer: If the ideal currency existed in today's world, it would possess the following three attributes, often referred to as the impossible trinity: 1) Exchange rate stability: the value of the currency is fixed (and relatively certain) in relationship to other major currencies. 2) Full financial integration: complete freedom of monetary flows would be allowed. 3) Monetary independence: domestic monetary and interest rate policies would be set by each individual country to pursue desired national economic policies. These qualities are termed the impossible trinity because the forces of economics do not allow a country to simultaneously achieve all three goals.
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Indicate whether the statement is true or false
The Maastricht Treaty called for:
A) the creation of an Asia Free Trade Area (AFTA). B) the creation of an economic and monetary union in Europe. C) Chile's acceptance into Mercosur. D) the purchase of CDs and tapes from distributors in Europe. E) the creation of the seven-nation European Free Trade Association (EFTA).