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

• goods and services
• gold and silver
• dollars and other hard currencies
• exportable surplus

Answer: (c) dollars and other hard currencies

Notes:

• International liquidity refers to the settling imbalances in international payments. These payments arise out of international trade in goods and services and also in connection with capital movements between one country and another.
  • International liquidity in the broad sense consists of resources available to monetary authorities for the purpose of financing balance of payments deficits.
• It relates to international reserves of particular country who participates in world monetary and trading system.
• It is linked with international payments which appears from international trade. Since Dollar being the commander of international currency dominating across the world in forex, the problems related with international liquidity concerns with non-availability of dollar and other related currencies.