UPSC Prelims 2015·GS1·economy·open economy

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

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Last updated 23 May 2026, 3:31 pm IST
  1. Agoods and services
  2. Bgold and silver
  3. Cdollars and other hard currenciesCorrect
  4. Dexportable surplus

Explanation

The problem of international liquidity refers to the non-availability or insufficient supply of internationally accepted means of payment required to finance international trade and financial transactions. In the modern global economy, this primarily involves widely accepted and convertible currencies, often referred to as 'hard currencies'. The US Dollar is the most prominent international reserve currency, but other major currencies like the Euro, Japanese Yen, and Pound Sterling also play significant roles. When there's a shortage of these 'dollars and other hard currencies' that are widely accepted for cross-border payments, it creates a problem of international liquidity, hindering global trade and investment flows.
economy: The problem of international liquidity is related to the non-availability of
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