SBI Clerk Prelims / UIIC 2016- Practice English Questions (Reading Comprehension) Set-41:
Dear Readers, Important Practice English Questions for Upcoming SBI Exam 2016 was given here. Aspirants those who are preparing for the examination can use this.
Directions (Q.1-5): Read the passage carefully and answer the questions given below it. Certain words/phrases have been given in bold to help you locate them while answering some of the questions .
Suddenly, the rift between the Reserve Bank of India and the finance ministry on managing growth and prices has taken an egregious turn . Chief Economic Advisor Arvind Subramanian, referring to the wholesale price index (WPI) trend since November 2014 as well as the GDP deflator, has said that we have a problem of deflation-not inflation –on our hands . This comes barely a week after the RBI’s annual report saying that “ inflation projections for January 2016 are still at the upper limit of RBI’s inflation objective ”. Days after the release of the report, Governor Raghuram Rajan recanted by hinting that a rate cut was on the cards . Indeed, it should be, when growth , and not prices , is the threat . The report itself points out that the minus 4.1 per cent reading of the WPI for July included a fall of 1.4 per cent fall year-on-year in manufactured products, “indicating the extent of slack in the economy as well as falling cost pressures” . The RBI has, in a way, conceded that by using just the consumer price index (CPI) as an inflation indicator it may have missed the lurking threat of deflation . It has had little to say on the divergence the WPI and CPI (a staggering 10 percentage points for July!) , an issue over which Rajan’s predecessor D Subbarao expressed bewilderment two years ago when the divergence then was about five percentage points . Intermediation costs cannot explain this order of difference . Finally, the confusion led to the move to track CPI as being truer to the aam aadmi’s inflation experience . We now know that in doing so the WPI and the GDP deflator should not be disregarded . Prices according to the deflator, which tracks the difference between output at current and constant prices, are growing at just 1.7 per cent . The deflator is considered a reliable indicator, but is available only on a quarterly basis .
Both the CPI and the WPI are declining due to low commodity prices, but the growing gap since December 2014 also indicates a lack of demand for intermediate and final goods; in other words, deflation . The RBI should fine-tune its ‘inflation targeting’ methods by tracking the CPI, WPI and GDP deflator and arriving at upper and lower limits for all . A wrong estimate of both the actual and targeted inflation rate can lead to a wrong estimate of the ideal repo rate as well (through the ‘Taylor rule’, a formula that central bankers tend to use ) . Differences between indices must be taken into consideration . A failing WPI is evidence enough of a weak investment climate .
1). What is/are the reason(s) of difference between the RBI and the Finance Ministry as mentioned in the given passage ?
(A) Issues related to management of growth and prices
(B) Concept of deflation and inflation
(C). Superiority of the Finance Ministry over RBI
a) Only (A)
b) Only (B)
c) Only (C)
d) Only (A) and (B)
e) Only (A) , (B)and (C)
2). Which of the following affects the common people more directly ?
d) Bank Rate
e) None of these
3). Which of the following statements is not true in the context of the passage ?
a) According to the Chief Economic Advisor, there is a problem of deflation and not inflation.
b) Due to low commodity prices . both the CPI and WPI are soaring .
c) RBI’s annual report says that inflation projections for January 2016 are still at the upper limit of RBI’s inflation objectives .
d) A declining wholesale price index indicates a weak investment climate .
e) None of these
4). Which of the following statements regarding ‘deflator’ is/are true? Answer in the context of the passage .
(A) Although the deflator is considered a reliable indicator, it is available only on a quarterly basis.
(B) Deflator tracks the difference between output at current and constant prices.
(C) The GDP deflator shows how much a change in the base year’s GDP depends upon changes in the price level .
a) Only (A) and (B)
b) Only (B) and (C)
c) Only (A) and (C)
d) Only (A)
e) Only (B)
5). What is the central idea of the given passage?
a) Impact of inflation on Indian economy
b) A wrong estimate of both the actual and targeted inflation rate leads to a wrong estimate of the ideal repo rate .
c) Growth and not inflations is the problem for Indian economy.
d) Declining trend of Wholesale Price Index
e) Other than the given options .
Directions (Q. 6-8): Choose the word/group of words which is MOST SIMILAR in meaning to the word/group of words printed in bold as used in the passage .
Directions (Q. 9-10): Choose the word/group of words which is MOST OPPOSITE in meaning of the word/group of words printed in bold as used in the passage.
1) d) 2) c) 3) b) 4) a) 5) c) 6) b) 7) e) 8) c) 9) d) 10) a)
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