What is the name given to foreign currency held by a central bank or monetary authority for the purposes of exchange rate intervention and settling international government obligations?

Multiple choice question for Basic of Economics. Select an option, then review the explanation below.

Explanation

The correct term is 'Reserve currency,' which refers to foreign money kept by central banks to manage exchange rates and fulfill intergovernmental financial commitments. Other options like 'Hot currency,' 'Pegged currency,' and 'Hard currency' do not specifically describe this function.

Practice related questions from the same subject.

1.Which of the following best describes deflation?
2.Under what condition can two nations benefit from engaging in international trade?
3.Which of the following represents a legitimate form of currency?
4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?
5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

What is the name given to foreign currency held by a central bank or monetary authority for the purposes of exchange rate intervention and settling international government obligations?

Explanation

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