The 'Smithsonian Agreement' of 1971 attempted to: MCQ with Answer and Explanation

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The 'Smithsonian Agreement' of 1971 attempted to:

A. abolish the IMF

B. create the euro

C. ban currency trading

D. realign fixed exchange rates after the collapse of the dollar-gold link

Answer: Option D

Solution (By JKSSB Mock Tests)

The Smithsonian Agreement attempted to establish new fixed exchange rate parities after the dollar-gold link ended.

This question belongs to: Economy GK Economy Set 1

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Question #1

The 'standing deposit facility' was introduced by RBI as a tool for:

A. long-term investment

B. absorbing liquidity without collateral

C. lending to banks

D. export finance

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Correct Answer: Option B

Explanation:
Standing Deposit Facility allows RBI to absorb liquidity from banks without providing collateral.

This question belongs to: Economy GK Economy Set 1

Question #2

The 'dollarization' of an economy means:

A. exporting to the US only

B. pegging to the dollar

C. adopting the US dollar as the official currency

D. buying US bonds

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Correct Answer: Option C

Explanation:
Dollarization occurs when a country adopts the US dollar as its official currency.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is NOT a determinant of the supply of a commodity?

A. Cost of production

B. Tastes and preferences of consumers

C. Price of the commodity

D. Technology

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Correct Answer: Option B

Explanation:
Tastes and preferences of consumers affect demand, not supply. Supply is determined by price, cost of production, technology, prices of related goods, and government policies.

This question belongs to: Economy GK Economy Set 1

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