Reading Comprehension for IBPS PO 2017 : Set – 25

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Reading Comprehension for IBPS PO 2017. Welcome to Online English Section  in letsstudytogether.co  Here we are providing a set of English Quiz for Bank and Insurance exam 2017 on  Reading Comprehension.

 Reading Comprehension for IBPS PO 2017

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Q.Read the following passage carefully and answer the questions given below it. Certain words are given in bold to help you locate them while answering some of the questions.

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The alarm bells should start ringing any time now. An important component of the economy has been sinking and needs to be rescued urgently. This critical piece is ‘savings’ and, within this overall head, household savings is the one critical subcomponent that needs close watching and nurturing.

While it is true that one of the primary reasons behind the current economic slowdown is the tardy rate of capital expansion – or, investment in infrastructure as well as plant and machinery – all attempts to stimulate investment activity are likely to come to naught if savings do not grow. Without any growth in the savings rate, it is futile to think of any spurt in investment and, consequently, in the overall economic growth. If we source all the investment funding from overseas, it might be plausible to contemplate investment growth without any corresponding rise in savings rate. But that is unlikely to happen.

Within the overall savings universe, the subcomponent ‘household savings’ is most critical. It provides the bulk of savings in the economy, with private corporate savings and government saving contributing the balance. The worrying factor is the nearstagnation in household savings over the last eight years or so. What’s even more disconcerting is the fact that household savings remained almost flat during the go-go years of 2004-08.

This seems to be counter-factual. There are many studies that show that there is a direct relationship between overall economic growth and household savings. So, at a time when India’s GDP was growing by over 9% every year, the household savings rate stayed almost constant at close to 23% of GDP. There was, of course, an increase in absolute terms, but it remained somewhat fixed as a proportion of GDP.

What is responsible for this contradictory movement? The sub-group on household savings, formed by the working group on savings for the 12th Plan set up by the Planning Commission and chaired by RBI deputy governor SubirGokarn, has this to say, “…a recent study had attributed the decline in the household saving ratio in the UK during 1995-2007 to a host of factors such as declining real interest rates, looser credit conditions, increase in asset prices and greater macroeconomic stability.

While recognising that one of the key differences in the evolving household saving scenario between the UK and India is the impact of demographics (dependency ratio), anecdotal evidence on increasing consumerism and the entrenchment of (urban) lifestyles in India, apart from the easier availability of credit and improvement in overall macroeconomic conditions, is perhaps indicative of some ‘drag’ on household saving over the last few years as well as going forward.” India has another facet: a penchant for physical assets (such as bullion or land). After the monsoon failure of 2009, and the attendant rise in price levels that has now become somewhat deeply entrenched, Indians have been stocking up on gold. Consequently, savings in financial instruments dropped while those in physical assets shot up. This is also disquieting for policy planners because savings in physical assets stay locked in and are unavailable to the economy for investment activity. There is a counter view that higher economic growth does not necessarily lead to higher savings. According to a paper published by Ramesh Jangili (Reserve Bank of India Occasional Papers, Summer 2011), while economic growth doesn’t inevitably lead to higher savings, the reciprocal causality does hold true. “It is empirically evident that the direction of causality is from saving and investment to economic growth collectively as well as individually and there is no causality from economic growth to saving and (or) investment.”

Whichever camp you belong to, it is beyond doubt that savings growth is a necessary precondition for promoting economic growth. The Planning Commission estimates that an investment of $1 trillion, or over 50 lakh crore, will be required for the infrastructure sector alone. And, a large part of this critical investment will have to be made from domestic savings.

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1.What is the main concern of the author behind saying that ‘the alarm bells should start ringing anytime now’?

A. The current economic growth is slowing down due to regular failure of monsoon.
B. Due to power shortage industrial growth could not touch the target.
C. Household savings are sinking and they require to be revamped.
D. Due to a sharp decline in real interest rates people have lost their enthusiasm to invest in govt schemes.
E. All the above

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(C) In the opening paragraph it is clearly mentioned that, ‘This critical piece is ‘savings’ and, within this overall head, household savings is the one critical subcomponent that needs close watching and nurturing.’ Therefore the main concern behind the alarm bells is option (C). Option (A) is a regular phenomenon. Option (B) is not the main concern as it is a temporary problem. Option (D) is not mentioned. Option (E) is ruled out.

2. What is/are the primary reasons behind the current economic slowdown?

A. Slow rate of capital expansion
B Tardy investment in infrastructure as well as plant and machinery
C. A rapid increase in the cases of corruption, and decreased FDI

A. Only A
B. Only A and B.
C. Either (A) or (C)
D. Both (B) and (C)
E. All (A), (B) and (C)

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B. In the opening line of the second paragraph it is sated that, ‘while it is true that one of the primary reasons behind the current economic slowdown is the tardy rate of capital expansion – or, investment in infrastructure as well as plant and machinery – all attempts to stimulate investment activity are likely to come to naught if savings do not grow.’ Therefore option (B) is the only correct choice.

3. How is household savings related to overall economic growth? Give your answer in the context of the passage?

A. Overall economic growth is directly related to household savings.
B. Overall economic growth is inversely proportional to household savings.
C. There is no specific relationship between overall economic growth and household savings.

A. Only C
B.Only B
C. Only A
D. Either (A) or (B)
E. Either (A) or (C)

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A. In the second paragraph it is said that, ‘Without any growth in the savings rate, it is futile to think of any spurt in investment and, consequently, in the overall economic growth.’ Therefore, option (A) overall economic growth

4. What was/were the reason(s) of drop in savings in financial instruments after 2009?

A. Rise in price level of gold
B. Decrease in real interest rates on savings in financial instruments
C. Investment in physical assets, particularly land
D. Only (A) and (C)
E. Only B and C

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C. It is mentioned in the passage that, ‘India has another facet: a penchant for physical assets (such as bullion or land). After the monsoon failure of 2009, and the attendant rise in price levels that has now become somewhat deeply entrenched, Indians have been stocking up on gold. Consequently, savings in financial instruments dropped while those in physical assets shot up.’ Threrefore option (C) is correct.

5. Which of the following is/are the reasons of a drag on household savings in India over the last few years?

A. Increasing consumerism
B. Entrenchment of urban lifestyle
C. Easier availability of credit
D. Improvement in overall macroeconomic conditions
E. All the above.

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E. It is clearly mentioned in the passage that, ‘While recognising that one of the key differences in the evolving household saving scenario between the UK and India is the impact of demographics (dependency ratio), anecdotal evidence on increasing consumerism and the entrenchment of (urban) lifestyles in India, apart from the easier availability of credit and
improvement in overall macroeconomic conditions, is perhaps indicative of some ‘drag’ on household saving over the last few years as well as going forward.’ Therefore option (e) is the correct answer.

6. Choose the word which is MOST similar in meaning to the word printed in bold color as used in the passage. 

stimulate

A. Harmony
B. Convulsion
C. encourage
D. wonder
E. stagnation

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C. encourage

7.Choose the word which is MOST similar in meaning to the word printed in bold color as used in the passage.

Stagnation

A. Creditable
B. stability
C. respectable
D. deplorable
E. good

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B. stability

8.Choose the word which is MOST opposite in meaning to the word printed in bold color as used in the passage.

Reciprocal

A. corresponding
B. complementary
C. unilateral
D. Accrued
E. Abased

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C. unilateral

Reciprocal – (of an agreement or obligation) bearing on or binding each of two parties equally.

Unilateral – performed by or affecting only one person, group

Click here for Reading Comprehension for IBPS PO 2017: Set – 24


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