Question

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

(a) goods and services 

(b) gold and silver 

(c) dollars and other hard currencies 

(d) exportable surplus

Answer 1

(c) Dollars and hard currencies are used for payments in international trade, investment and liquidation of international debt. So if there is shortage of liquidity, this means scarcity of Dollars and hard currencies to carry on the above transactions. That is why even SDR was introduced by IMF.