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

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Q: 22 (IAS/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?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,125,32,125,5,22,5

keywords: 

{'purchasing power parity': [0, 0, 0, 1], 'ppp dollars': [0, 0, 0, 1], 'exchange rates': [0, 0, 0, 1], 'ppp': [0, 0, 0, 1], 'largest economy': [0, 0, 0, 1], 'prices': [0, 5, 4, 14], 'india': [8, 1, 7, 13], 'different countries': [0, 1, 1, 3], 'goods': [0, 1, 5, 27]}

The first statement is correct. The Purchasing Power Parity (PPP) is a measure that compares the price levels of a basket of goods and services between different countries. It is a method used to standardize the prices across countries and provides an alternative to currency exchange rates for comparing economies.

However, the second statement is incorrect. As of recent data, when economies are measured by a PPP, India ranks third after China and the United States, not sixth. So, India is the third largest economy in terms of PPP dollars, not the sixth.

Therefore, option 1 is correct. Only the first statement is true, while the second one is false.