Which one of the following combinations of simultaneous policy actions is NOT possible? (A) Country A allows full international capital mobility, conducts an independent monetary policy, and follows a floating exchange rate regime (B) Country A allows full international capital mobility, conducts an independent monetary policy, and follows a fixed exchange rate regime (C) Country A allows full international capital mobility, cannot conduct an independent monetary policy, and follows a fixed exchange rate regime (D) Country A does not allow full international capital mobility, conducts an independent monetary policy, and follows a fixed exchange rate regime

GATE 2026 Question 48: Open-economy macroeconomics

Which one of the following combinations of simultaneous policy actions is NOT possible?

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Open-economy macroeconomics has come up 55 times in 7 exams since 2006.

This question is on The impossible trinity and exchange rate dynamics, part of Open-economy macroeconomics in International Economics.

The three goals no country can have together, and overshooting.

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