gs1medium

The problem of international liquidity is related to the non-availability of:

  1. A.goods and services
  2. B.gold and silver
  3. C.dollars and other hard currencies
  4. D.exportable surplus
▶ Answer & Explanation

Correct answer: C. dollars and other hard currencies

International liquidity refers to the readily available means of payment that can be used to settle international transactions. Historically, gold was a primary reserve asset, but since the Bretton Woods system's collapse, major currencies, particularly the US dollar, have become the primary instruments for international reserves and trade financing. When countries face a shortage of these widely accepted hard currencies, it creates a liquidity problem, hindering their ability to import goods or service external debts.

Source: UPSC gs1 2015

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