UPSC Previous Year Question | Prelims GS | 2019

Consider the following statements: 1. Purchasing Power Parity (PPP) exchange rates are calculated by comparing the prices of the same basket of goods and services in different countries. 2. In terms of PPP dollars, India is the sixth largest economy in the world. Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

Correct Answer

1 only

Explanation

PPP exchange rates are derived by comparing the price of the same basket of goods and services across countries (statement 1 correct). In PPP terms, India was the third largest economy (after China and the USA), not the sixth, so statement 2 is incorrect.

Topics: indian economy, national income and economic indicators, ppp exchange rates and india's rank, purchasing power parity