Read the passage and answer the question: The collapse of communism was followed in most of these countries by a painful process of transition from an authoritarian socialist system to a democratic capitalist system. The model of transition in Russia, Central Asia, and eastern Europe came to be known as ‘shock therapy'. Shock therapy varied in intensity and speed amongst the former second-world countries, but its direction and features were quite similar. |
Which of the following statements is correct? |
Only Statement A is correct. Only Statement B is correct. Both statements are correct. Neither of them is correct. |
Neither of them is correct. |
The correct answer is Option 4 - Neither of them is correct. Statement A- The value of the ruble, the Russian currency increased during the shock therapy. Correction in Statement A- The value of the ruble, the Russian currency DECLINED dramatically during the shock therapy. Correction in Statement B- The real GDP of Russia in 1999 was BELOW than what it was in 1989.
The value of the ruble, the Russian currency, declined dramatically. The rate of inflation was so high that people lost all their savings. The collective farm system disintegrated leaving people without food security, and Russia started to import food. The real GDP of Russia in 1999 was below what it was in 1989. The old trading structure broke down with no alternative in its place. |