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: a) 1 only
ExplanationStatement 1 is correct: PPP is an economic concept that compares the value of currencies by examining the cost of a standard “basket of goods” across different countries.It determines the exchange rate required for one currency to buy the same quantity of goods and services as it would in another country.Statement 2 is incorrect: As of the latest available data, India ranks as the third-largest economy globally in terms of GDP based on PPP.According to the International Monetary Fund’s World Economic Outlook, India’s GDP (PPP) is approximately $13.17 trillion, placing it behind China and the United States.259
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