The United Arab Emirates (UAE) wants a stable exchange rate with respect to the dollar,...
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The United Arab Emirates (UAE) wants a stable exchange rate with respect to the dollar, and therefore pegs its currency, the UAE dirham, to the US dollar. Also, in order to attract foreign investment, it allows free flow of capital both into and out of the country. Based on the theory of the impossible trinity, what does the UAE have to give up and why? Explain your answer.
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