Dear Readers, Here we have given Practice English Reading Comprehension quiz and questions for SBI PO 2018 Exams with detailed explanation. Candidates those who are preparing for Upcoming Bank Exams can make use of it.
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Direction (1-10): Read the passage carefully and answer the following questions.
Money is any object that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. Money is primarily a medium of exchange or means of exchange. It is a way for a person to trade what he has for what he wants.
Money is the most important and essential tool of modern economic life. One cannot imagine modern economic life without money. Barter economies or self-sufficient economies are the thing of past and historical significance. Money is the foundation stone of modern economic life. Money is the pivot around which all economic activities revolve. Money is important in all economies whether it is a socialist economy or a capitalist economy; or a backward economy or a rich economy. In the initial stages of exchange economy, commodities were exchanged with commodities. Such transactions were known as barter transactions. In this stage commodity was the form of money. However, under barter transactions there were difficulties relating to common measure of value, store of value, divisibility of goods, making deferred payments etc. Therefore, in place of commodities, gold and silver were used as money. But even this system could not continue for long because the available stock of gold and silver was not adequate to meet the demand for the quantity of money. Therefore, it was replaced by paper money where promissory notes were used as money. Now, besides paper money, credit money is being used extensively such as credit cards etc.
Money can be classified on the basis of relationship between the value of money and value of money as a commodity. Value of money means the face value of money. For example, the face value of five rupees coin is five rupees. Value of money as a commodity means the value of the commodity of which money is made of.
Full bodied money or commodity money is that whose face value is equal to its commodity value. This type of money was in existence when gold standard was prevalent. In other words, face value of the coin was equal to its intrinsic (commodity) value but due to the limited stock of precious metals this type of money was not continued for long. Now this kind of money is not found anywhere in the world.
Representative full bodied money refers to money which is usually made of paper. The value of representative full-bodied money is much higher than its value as a commodity. It is accepted as money as it can be conveniently used for carrying out transactions.
Credit money refers to the money whose intrinsic value (as a commodity) is much lower than its face value. For example, face value of Rs 100 note is Rs 100, but we would get a much lower value if we sell the note as a piece of paper. Credit cards, bank deposits are other examples of credit money.
Money performs various functions. Money provides the most efficient means of satisfying wants. Each consumer has a different set of wants. Money enables him (her) to decide which wants to satisfy, rank the wants in order of urgency and capacity (income) and act accordingly.
Money is the measuring rod of everything. By acting as a common denominator it permits everything to be priced, that is, valued in terms of money. Thus, people are enabled to compare different prices and thus see the relative values of different goods and services.
Money is the most liquid asset (liquidity measures how easily assets can be spent to buy goods and services). Money’s value can be retained over time. It is a convenient way to store wealth.
Money is used as a store of purchasing power. It can be held over a period of time and used to finance future payments. Moreover, when people save money, they get the assurance that the money saved will have value when they wish to spend it in the future. However, this statement holds only if there is no severe inflation (or deflation) in the country.
Money facilitates loans. Borrowers can use money to obtain goods and services when they are needed most. Money is used to measure and record financial transactions as also the value of goods or services produced in a country over time.
In a modern economy, most transactions (buying and selling) are made on the basis of credit. Most business dealings permit payment in the future for goods delivered now. Employees wait for a month or a week to receive their wages and salaries. Thus, the use of money permits the members of society to defer their spending from the present to some future date.
The value of money changes with time. According to the theory of time value of money (TVM) rational investors prefer to receive money today rather than the same amount of money in the future because of money’s potential to grow in value over a given period of time.
Time value of money is the concept that the value of money to be received in future is less than the value of money on hand today. One reason is that money received today can be invested thus generating more money. Inflation increases the prices of goods and services over time, effectively decreasing the quantity of goods and services you can buy with money in the future in comparison to the quantity of goods and services you can buy today with same amount. If wages remain the same but inflation causes the prices of goods and services to increase over time, it will take a larger percentage of your income to purchase the same good or service in the future.
1) According to the passage, which of the following functions of money helps people in increasing their purchasing power?
a) measure of value
b) store of value
c) basis of credit
d) standard of postponed payments
e) medium of exchange
2) In the passage, according to the theory of TVM, the value of money –
a) increases with time
b) decreases with time
c) does not change with time
d) depends upon the economic phase
e) depends upon the investment policies
3) According to the passage, what was the reason behind the obsolescence of full bodied money?
a) unsuitability for the future payment
b) unsuitability for borrowing and lending
c) difficulty in carrying out the money for transaction
d) difficulty in storing the money
e) lack of material for making the money
4) According to the passage, which of the followings was not the drawback of barter system?
a) inconvenience in lending and borrowing
b) making deferred payments
c) divisibility of goods
d) measure of value
e) store of value
5) Which of the following statements is true in the context of the passage?
a) Liquidity measures how easily assets can be spent to buy financial products only.
b) In the initial stages of exchange economy, commodities were exchanged with commodities.
c) Representative full bodied money refers to money which is usually made of metal.
d) None of the above
e) All are true
6) Find the incorrect statement on the basis of the given passage.
a) In a modern economy, most transactions (buying and selling) are made on the basis of credit.
b) Full bodied money or commodity money is that whose face value is equal to its commodity value.
c) According to the theory of time value of money, rational investors prefer to receive money in future.
d) Money can be classified on the basis of relationship between the value of money and value of money as a commodity.
e) All are correct
7) Choose the word which as same meaning as the word assurance
8) Choose the word which as same meaning as the word defer
e) go forward
9) Choose the word which as opposite meaning as the word extensively
10) Choose the word which as opposite meaning as the word conveniently
1). Correct Answer is: b)
According to the passage, money acts as store of value or wealth or assets which is used for purchasing the goods and services so store/stock of value or wealth will increase the purchasing power of people.
2). Correct Answer is: b)
It is given in the passage that TVM is the concept which tells that the value of money to be received in future is less than the value of money on hand today. It means according to the theory of TVM the value of money decreases with time.
3). Correct Answer is: e)
It is clearly mentioned in the passage that inadequate or limited stock of gold and silver was the reason behind the obsolescence of full bodied money.
4). Correct Answer is: a)
Inconvenience in lending and borrowing is not given as drawback of barter system in the passage.
5). Correct Answer is: b)
According to the passage, true statement is “in the initial stages of exchange economy, commodities were exchanged with commodities.”
6). Correct Answer is: c)
It is clearly mentioned in the passage, that according to the theory of time value of money (TVM) rational investors prefer to receive money today rather than the same amount of money in the future because of money’s potential to grow in value over a given period of time.
7). Correct Answer is: e)
The meaning of “assurance” is “affirmation / confirmation / avowal”.
8). Correct Answer is: d)
The meaning of “defer” is “postpone / reschedule / rearrange”.
9). Correct Answer is: c)
The meaning of “extensively” is “widely / broadly” and its opposite is “succinctly / briefly”.
10). Correct Answer is: b)
The meaning of “conveniently” is “expediently /easily” and its opposite is “awkwardly /gawkily /badly”.
Daily Practice Test Schedule | Good Luck
|Topic||Daily Publishing Time|
|Daily News Papers & Editorials||8.00 AM|
|Current Affairs Quiz||9.00 AM|
|Quantitative Aptitude “20-20”||11.00 AM|
|Vocabulary (Based on The Hindu)||12.00 PM|
|General Awareness “20-20”||1.00 PM|
|English Language “20-20”||2.00 PM|
|Reasoning Puzzles & Seating||4.00 PM|
|Daily Current Affairs Updates||5.00 PM|
|Data Interpretation / Application Sums (Topic Wise)||6.00 PM|
|Reasoning Ability “20-20”||7.00 PM|
|English Language (New Pattern Questions)||8.00 PM|