In international finance which unit of valuation created by the International Monetary Fund IMF is popularly known as paper gold?

Introduction / Context:
Countries and international institutions sometimes use special units of account that are not physical currencies but serve for valuation, reserves and settlements. One such unit created by the International Monetary Fund IMF is popularly called paper gold because it supplements official reserves without being a metal. This question tests understanding of that concept and its correct abbreviation.

Given Data / Assumptions:
The question tells us the following.

• We must identify a unit of valuation known as paper gold.
• The unit is associated with the International Monetary Fund.
• Options include SDR, Eurodollar, GDR and Petrodollar.
• Only one of these fits the description of an IMF reserve asset.

Concept / Approach:
The IMF introduced Special Drawing Rights abbreviated as SDR to supplement member countries official reserves. SDRs are not physical currency but a claim on freely usable currencies of IMF members, so they function like paper gold rather than real gold. Eurodollar refers to United States dollar deposits held outside the United States, GDR stands for Global Depository Receipt and Petrodollar relates to oil trade revenues. The approach is to match paper gold with SDR and eliminate unrelated terms.

Step-by-Step Solution:
Step 1: Recall that SDR stands for Special Drawing Rights and was created by the IMF in the late 1960s. Step 2: Understand that SDRs are allocated to member countries and can be exchanged for hard currencies when needed. Step 3: Recognise that because SDRs increase a country reserve position without physical gold they are often nicknamed paper gold. Step 4: Examine Eurodollar, which simply denotes dollar deposits in foreign banks and not an IMF valuation unit. Step 5: Note that GDR relates to securities traded in international markets and Petrodollar refers to oil related dollar earnings. Step 6: Conclude that SDR is the only option consistent with the description.

Verification / Alternative check:
IMF official documents describe Special Drawing Rights as an international reserve asset and explain that they were created to supplement existing reserves. Many textbooks explicitly state that SDRs are sometimes called paper gold because they function as reserve assets without being tied to physical bullion. None of these sources use the term paper gold for Eurodollars, GDRs or Petrodollars. This cross reference confirms SDR as the correct answer.

Why Other Options Are Wrong:
Option B Eurodollar refers to United States dollar deposits in banks outside the United States and is a market concept, not an IMF reserve unit. Option C GDR or Global Depository Receipt is a financial instrument that allows shares of a company to be traded in international markets and has no relation to IMF reserves. Option D Petrodollar describes foreign currency earnings of oil exporting countries, commonly denominated in dollars, and is not a valuation unit. These options therefore do not match the description of paper gold.

Common Pitfalls:
Some students see the prefix Euro or the word dollar and mistakenly associate them with international units of account. Others may confuse GDR with SDR because the abbreviations appear similar. A frequent mistake is not linking paper gold specifically with IMF initiatives and instead thinking of any non physical financial asset. Clear understanding that SDR is an IMF created reserve asset helps prevent such confusion.

Final Answer:
The unit of valuation popularly known as paper gold is the SDR Special Drawing Rights.