Question : What is the term used to describe a situation where a country's currency is not freely tradable or convertible into other currencies?
Option 1: Convertible currency
Option 2: Non-convertible currency
Option 3: Reserve currency
Option 4: Intervention currency
Correct Answer:
Non-convertible currency
Solution : The correct answer is b) Non-convertible currency
Non-convertible currency refers to a situation where a country's currency is not freely tradable or exchangeable for other currencies. In such cases, there may be restrictions or limitations imposed by the government or central bank on the convertibility of the currency. This can include restrictions on currency exchange, capital controls, or limitations on the transfer of funds across borders. Non-convertible currencies are typically less widely accepted in international trade and finance compared to convertible currencies.
