Consider the following statements regarding the transactions happening at the international level for trade and financial flows. There is an international authority with the power to force the use of a particular currency There is a basket of currencies which can only be used to settle international transactions Currencies which maintain a stable purchasing power are generally accepted Freely convertible currencies are generally accepted Select the correct answer using the code given below: Options: A . &nbsp(ii) & (iv) only B . &nbsp(iii) & (iv) only C . &nbsp(i) only D . &nbsp(ii), (iii) & (iv) only

Consider the following statements regarding the transactions happening at the in

Question

Consider the following statements regarding the transactions happening at the international level for trade and financial flows.

There is an international authority with the power to force the use of a particular currency

There is a basket of currencies which can only be used to settle international transactions

Currencies which maintain a stable purchasing power are generally accepted

Freely convertible currencies are generally accepted

Select the correct answer using the code given below:

Options:

A . (ii) & (iv) only

B . (iii) & (iv) only

C . (i) only

D . (ii), (iii) & (iv) only

Answer: Option B
Answer: (b)
There is no international authority that directs that trade between two countries should happen only with some specific currencies. Any two countries are free to transact with any currency if they are willing.
Generally, any country will accept that currency for its trade (exports), if that currency is not losing value (less inflation) and it is stable and it is freely convertible in other currencies.

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