Dear Readers, Here we have given Practice English Reading Comprehension quiz and questions for SBI Clerk 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.
The Gross Domestic Product (GDP) is one of the main issues highlighted by the media. The media is incessantly bombarding us with information pertaining to GDP. News about increasing GDP is taken with great enthusiasm whereas news about decreasing GDP creates an atmosphere of pessimism.
Needless to say, that any matter which is so important to the economy will get politicized. Therefore GDP also has the power to make or break governments. This is why governments all over the world always promise an increasing GDP during their regime.
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well (in the United States, for example, the government releases an annualized GDP estimate for each quarter and also for an entire year).
The ratio of GDP to the total population of the region is the per capita GDP and the same is called Mean Standard of Living. GDP is considered the “world’s most powerful statistical indicator of national development and progress”.
William Petty came up with a basic concept of GDP to attack landlords against unfair taxations during warfare between the Dutch and the English between 1652 and 1674. Charles Davenant developed the method further in 1695. The modern concept of GDP was first developed by Simon Kuznets for a US Congress report in 1934. In this report, Kuznets warned against its use as a measure of welfare. After the Bretton Woods conference in 1944, GDP became the main tool for measuring a country’s economy.
According to the idea introduced by economist John Maynard Keynes, “the number one driver of the economy is demand. If we can measure the economy in terms of what everyone spends, then we can estimate the level of production in our economy. We measure the economy using GDP.”
There are various components which help in measuring the GDP like Private Consumption Expenditure. This component measures the money value of consumer goods and services which are purchased by households and non-profit institutions for current use during a period of account.
Investment expenditure is also the important constituent of GDP. Gross Private Domestic Investment shows the aggregate value in this regard. Investment Includes building of machinery housing construction, construction of factories and offices and additions to a firm’s inventories of goods.
Whereas intermediate goods are used up in the process of making other goods, capital goods (like machinery, building, etc.) get partially depleted in producing other goods and services. This is called depreciation of fixed capital goods.
Government’s purchase of goods and services are another part of GDP. This component summarizes government spending on goods and services. It includes purchase of intermediate goods and wages and salaries paid by the government. All government purchases are a proxy measure for government output.
The net export shows the difference between domestic spending on foreign goods and foreign spending on domestic goods. Thus, the difference between Exports and Imports of a country is called Net Exports which is also an important part of the GDP.
There are many different ways to measure a country’s GDP. Considering that GDP is based on a monetary value of an economy’s output, it is subject to inflationary pressure. Over a period of time, prices typically tend to go up in an economy and this is reflected in the GDP. Thus, just by looking at an economy’s unadjusted GDP, it is difficult to tell whether the GDP went up as a result of production expanding in the economy or because prices escalated.
That’s why economists have come up with an adjustment for inflation to arrive at an economy’s real GDP, rather than its nominal GDP, which ignores inflation and deflation. By adjusting the output in any given year for inflation so that it reflects the price levels that prevailed in a reference year, called “the base year,” economists adjust for the inflation effect. This way, it is possible to compare a country’s GDP from one year to another and see if there is any real growth.
Investors look at the growth rate in GDP as part of their asset allocation decision. They can also compare the GDP growth rates of different countries and make decisions about allocating their assets to stocks in these fast-growing economies.
The Federal Reserve uses the growth rate and other GDP statistics as part of their decision process in determining what type of monetary policies to implement. If the growth rate is slowing it might implement an expansionary monetary policy to try to boost the economy. If the economic growth rate is robust it might use monetary policy to slow things down in an effort to ward off inflation.
GDP is commonly used as an indicator of the economic health of a country, as well as a gauge of a country’s standard of living. It is widely followed and discussed by economists, analysts, investors and policy makers. The corporate profits and inventory data in the GDP report are a great resource for equity investors, as both categories show total growth during the period, corporate profits data also displays pre-tax profits, operating cash flows and breakdowns for all major sectors of the economy.
1) In the passage, according to the Keynes how can the level of production be measured in the economy?
a) by measuring the investment
b) by measuring the demand
c) by measuring the saving
d) by measuring the income
e) by measuring expenditure
2) According to the passage, GDP does not help in-
a) estimating economic health of the country
b) estimating the tax revenues
c) choosing the financial policies
d) measuring the country’s living standard
e) comparing the different economies
3) According to the passage, which of the followings will not be needed for estimating the GDP?
a) net export
b) government transfer payments
c) government purchases of goods and services
d) gross private domestic investment
e) private consumption expenditure
4) According to the passage, why did the basic concept of GDP surface?
a) against unfair international trade laws
b) for assessing the growth of public sector
c) for altering the domestic trade laws
d) against unfair taxation
e) for measuring the economic growth
5) Which of the following statements is true in the context of the passage?
a) If the economic growth rate is robust Federal Reserve might use monetary policy to slow things down in an effort to ward off inflation.
b) The difference between Exports and Imports of a country is called Net Import
c) There are three components which help in measuring the GDP
d) None of the above
e) All are true
6) Find the incorrect statement on the basis of the given passage.
a) Capital goods (like machinery, building, etc.) get partially depleted in producing other goods and services.
b) Investors look at the growth rate in GDP as part of their asset allocation decision.
c) Real GDP ignores the inflation and deflation.
d) After the Bretton Woods conference in 1944, GDP became the main tool for measuring a country’s economy.
e) All are correct
7) Choose the word which as same meaning as the word pessimism
8) Choose the word which as same meaning as the word robust
9) Choose the word which as opposite meaning as the word escalated
10) Choose the word which as opposite meaning as the word depreciation
1) Answer: e)
It is given in the passage that according to Keynes, if we can measure the economy in terms of what everyone spends, then we can estimate the level of production in our economy.
2) Answer: b)
According to the passage GDP does not help in estimating the tax revenues as it is not given in the passage.
3) Answer: b)
In the passage, government transfer payments have not been explained as a constituent of GDP so these payments will not be included while estimating the GDP.
4) Answer: d)
It is mentioned in the passage that basic concept of GDP was come up to attack landlords against unfair taxations during warfare between the Dutch and the English.
5) Answer: a)
According to the passage, true statement is “if the economic growth rate is robust federal reserve might use monetary policy to slow things down in an effort to ward off inflation.”
6) Answer: c)
It is clearly mentioned in the passage that nominal GDP ignores the inflation and deflation not the real GDP.
7) Answer: c)
The meaning of “pessimism” is “cynicism / gloom/ doubt”.
8) Answer: e)
The meaning of “robust” is “strong / burly /healthy”.
9) Answer: d)
The meaning of “escalated” is “soared / mounted” and its opposite is “plummeted /plunged”.
10) Answer: b)
The meaning of “depreciation” is “reduction / diminution” and its opposite is “levitation ascent”.
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|