Sentence:  An <WSD>economy</WSD> open to free movement of capital can keep a fixed exchange rate, for example, only by subjugating monetary-policy goals to its defence—by raising interest rates sharply, say, when capital outflows put downward pressure on the currency. Yet the trilemma also implies that an economy can enjoy both free capital flows and an independent monetary policy, so long as it gives up worrying about its exchange rate. 
Meaning of the word marked with <WSD> tags:  The system of production and distribution and consumption. The overall measure of a currency system; as the national economy.