The correct option is 2 and 3 only.
Explanation
To compare Per Capita Income across different nations, economic data must be standardized. This involves converting national incomes into a common currency and often adjusting for differences in the cost of living (price levels) between countries using Purchasing Power Parity (PPP).
Statement-wise Analysis
- Statement 1 is Incorrect. While countries calculate their national income initially in their local currency, using local currency for international comparison is not feasible. Comparing values in Rupees directly against Yen or Pounds without conversion would yield meaningless results due to differing currency values.
- Statement 2 is Correct. To ensure uniformity and comparability, the Per Capita Income of various countries is converted into a common global currency, typically the US Dollar. This provides a standard baseline for ranking and analysis.
- Statement 3 is Correct. This statement describes the concept of Purchasing Power Parity (PPP). Mere conversion to dollars at market exchange rates may not reflect the actual standard of living because prices of goods vary across countries. The income is therefore adjusted so that one dollar represents the same purchasing power (i.e., buys the same basket of goods and services) in every country.
Key Takeaway: International comparisons of Per Capita Income are standardized by converting local currencies to a common currency (usually the US Dollar) and are often adjusted for Purchasing Power Parity (PPP) to account for differences in the cost of living.