International TradePYQ - May 2022 (Inter)Question 178 of 20
All Questions

Special Drawing Rights (SDRs) are created by:

Options

AWorld Bank
BIMF
CWTO
DRBI
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Correct Answer

✅ Option b — IMF

All Options:

  • AWorld Bank
  • BIMF
  • CWTO
  • DRBI

Detailed Solution & Explanation

To determine which organization creates Special Drawing Rights (SDRs), we need to understand what SDRs are and their purpose in the international monetary system. • SDRs are an international reserve asset, created to supplement the official reserves of member countries. • The main function of SDRs is to provide a stable store of value and a unit of account for international transactions. • The creation of SDRs is linked to the international monetary system, which is overseen by the International Monetary Fund (IMF). • The IMF is responsible for promoting international monetary cooperation, exchange rate stability, and a stable system of exchange rates. The correct answer is the IMF because it is the organization that oversees the international monetary system and has the authority to create SDRs. • The World Bank, on the other hand, focuses on providing financing for development projects, making it an incorrect option. • The Reserve Bank of India (RBI) is the central bank of India and does not have the authority to create SDRs, which are an international reserve asset.

About This Chapter: International Trade

Paper

Paper 4: Business Economics

Weightage

10%

Key Topics

Theories, Trade Policy, Exchange Rates

This chapter explores trade between nations — why countries trade, the theories of Absolute and Comparative Advantage, Balance of Payments, Exchange Rate systems (Fixed vs Flexible), and India's trade policy including tariffs, quotas, and WTO rules.

View Official ICAI Syllabus

Exam Strategy Tip

Understand Comparative Advantage theory thoroughly — it's the foundation of international trade. Also focus on the Balance of Payments structure and what causes deficits.

More Questions from International Trade

Exchange rate determined by market forces is called:

Tariffs generally:

Balance of Trade refers to:

WTO was established in:

Devaluation of currency encourages:

Comparative Cost Advantage theory was given by:

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