UPSC Prelims 2019 · GS Paper I
Question 82: Economy and Social Development
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?
AnswerUPSC’s answer is (a).
Only statement 1 is correct. PPP exchange rates are calculated by comparing the price of the same basket of goods and services in different countries, which shows what a currency can buy at home rather than what it fetches in the market. Statement 2 is wrong: in PPP terms India is the third largest economy in the world, behind China and the United States, not the sixth.
- 1. PPP compares prices of the same basket across countries.
- 2. India is third largest in PPP terms.
How you could have got this
- If you were sure statement 1 is correct, (b) and (d) go: each of them leaves 1 out.
What you needed to know: PPP compares prices of the same basket across countries.
- Then, if you were sure statement 2 is not correct, (c) goes: it includes 2.
What you needed to know: India is third largest in PPP terms.
Only (a) is left. This one needs every statement.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Correct: only the PPP definition holds.
- (b) India is third in PPP terms, not sixth.
- (c) Statement 2 is false.
- (d) Statement 1 is true.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2019, General Studies Paper I, Series A. The paper on upsc.gov.in.