Under the ‘Impossible Trinity’ framework, what must a country sacrifice to maintain both a fixed exchange rate and an independent monetary policy?

💡 Explanation:

The Mundell-Fleming Trilemma (Impossible Trinity) posits that a country cannot simultaneously achieve a fixed exchange rate, free capital movement, and an independent monetary policy. If a state chooses to fix its currency and control its interest rates, it must implement capital controls to prevent arbitrage.