Writing on his blog in 2016, former Fed Chairman Ben Bernanke noted: Here is the trilemma in

Question:

Writing on his blog in 2016, former Fed Chairman Ben Bernanke noted: “Here is the trilemma in action: If China wants to use monetary policy to manage domestic demand and to simultaneously free up international capital flows, it may not be able to fix the exchange rate at current levels.”
a. What does Bernanke mean by “the trilemma”?
b. Why might China be unable to fix its exchange rate if it is using an expansionary monetary policy and allowing free capital flows?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...