GyanGramConsider the following statements: 1. Purchasing Power Parity (PPP) exchange rates are calculated by comparin…
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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?
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• Correct Answer: A
• PPP exchange rates compare prices of a common basket of goods across countries to measure relative purchasing power.
• In PPP terms, India is the third-largest economy (after China and USA); it is sixth in nominal GDP terms.
• Statement 2 is incorrect.
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