Question

The problem of international liquidity is related to the non-availability of (c) dollars and other hard currencies.

International liquidity refers to the availability of funds or assets that can be used for international transactions. It ensures that countries have access to adequate financial resources to facilitate trade, investment, and other economic activities across borders.

The most widely accepted and commonly used form of international liquidity is major currencies like the U.S. dollar, euro, yen, and pound sterling. These currencies are considered "hard" or stable, and they are widely accepted for international transactions.

When there is a shortage of dollars and other hard currencies in the international financial system, it creates a problem of international liquidity. This shortage can lead to difficulties in conducting international trade and investment, as countries may not have enough foreign exchange reserves to meet their obligations or finance their imports.