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: Concept
Shock Therapy refers to the sudden shift in economic policy in post-communist states.

Step 2: Meaning
It was a transition model designed to move states from a command economy (socialism) to a free-market economy (capitalism).

Step 3: Analysis
Statement I says it was a transition from capitalism to socialism, which is factually the reverse of what happened. Statement II is correct as the IMF and World Bank were the primary architects and influencers of this transition.

Step 4: Conclusion
Since Statement I is false and Statement II is true, Option (C) is the correct choice. Final Answer: (C)