UPSC Civil Services Model Paper 8

The Panama Canal connects the Atlantic Ocean in the east to the Pacific Ocean in the West .
Hence statement 1 is incorrect .
It was constructed across the Panama Isthmus between Panama City and Colon by the U.S. government which purchased 8 km of area on either side and named it the Canal Zone.
The Canal is about 72 km. long and involves a very deep cutting for a length of 12 km.
Hence statement 2 is correct .
It has a six lock system and ships cross the different levels (26 m up and down) through these locks before entering the Gulf of Panama.
It shortens the distance between New York and San Francisco by 13,000 km by sea. Likewise the distance between Western Europe and the West-coast of U.S.A.; and North-eastern and Central U.S.A. and East and South-east Asia is shortened.
The economic significance of this Canal is relatively less than that of the Suez. However, it is vital to the economies of Latin America.