The problem of international liquidity is related to the nonavailability of:
✓ Correct answer: c) dollars and other hard currencies
ExplanationInternational liquidity refers to the availability of acceptable means of payment for international transactions.It’s essentially about having enough of the currencies that are widely used and accepted in global trade and finance.Historically, gold played this role, but in the modern era, “hard currencies,” particularly the US dollar, have become the primary reserve currencies and mediums of exchange for international transactions.The “problem of international liquidity” arises when there is a shortage of these hard currencies.If countries don’t have enough dollars (or other widely accepted currencies) to pay for their imports, service their debts, or invest abroad, it can disrupt international trade and financial flows.Indian Economy 311 270
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