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UPSC Prelims 2019 Paper-1 📅 02 Jun, 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?

A
1 only
B
2 only
C
Both 1 and 2
D
Neither 1 nor 2
Result Summary
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UPSC Prelims
2019 • 02 Jun, 2019 • Paper-1
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?
Correct Answer
1 only
Statement 1 Analysis: This is conceptually correct. Purchasing Power Parity (PPP) inherently acts as an economic equalizer; it compares the absolute purchasing ......
Ref/Book : UPSC Prelims 2019
Ref. Subject Economy
Chapter -
Ref. Topic Macroeconomics
Pg. No -
💡 Analysis & Explanation
Statement 1 Analysis ▼
This is conceptually correct. Purchasing Power Parity (PPP) inherently acts as an economic equalizer; it compares the absolute purchasing power of varying currencies by evaluating the exact cost of a standardized, identical basket of goods and services across different nations.
Statement 2 Analysis ▼
This is factually incorrect. At the time of this economic assessment, India was firmly ranked and acknowledged as the third-largest economy globally in terms of PPP, positioned strongly behind only China and the United States, certainly not the sixth.
Conclusion ▼
Only the economic definition outlined in statement 1 is factually accurate.
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