Question

Statement I: The 'Shock Therapy' was a model of transition from capitalism to socialism.
Statement II: It was influenced by the World Bank and IMF.

• A. Both are correct.
• B. Statement I is correct, II is wrong.
• C. Statement I is wrong, II is correct.
• D. Both are wrong.

Hint:

Recall: "Shock Therapy" was meant to "shock" the old socialist system into becoming a capitalist one.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Shock Therapy refers to the sudden shift in economic policy in post-communist states aimed at creating market economies.
Step 2: Detailed Explanation:
Analysis of Statement I: Shock therapy was a painful transition from socialism (state-controlled economy) to capitalism (free-market economy). Statement I incorrectly says it was from capitalism to socialism. Thus, Statement I is wrong.
Analysis of Statement II: This transition was actively promoted and financed by international institutions like the International Monetary Fund (IMF) and the World Bank. Thus, Statement II is correct.
Step 3: Final Answer:
Since Statement I is false and Statement II is true, the answer is (C).