English Quiz - 38 | Bank Exams

Directions(1-10): Read the following passage very carefully and answer the questions given below appropriately. There are certain words and phrases in the passage in bold to help you find them easily in order to answer some of the questions.

According to a business dictionary, inflation is defined as sustained, rapid increase in the general price level, as measured by some broad index number of prices, such as Consumer Price Index or Wholesale Price Index, over months or years. The high rate of inflation results in the decreasing purchasing power of a currency. It has the worst impact on fixed - wage earners and is a disincentive to save. Ultimately, it results in widening the gap between the rich and the poor. High rate of inflation puts upward pressure on interest rates. The increased interest rate does not bode well for investment in industry, and in the medium run, the investment declines.

Any price increase alone due to factor such as crop failure, however, is not inflation. It is because such increases are self-limiting in their effects. Sometimes, modern inflation is desirable so as to keep the optimism sustained in the market. Generally, some economies show some increase in prices as they recover from recession. Thus, it is a sign of recovery of economy as well. There is no one single, universally accepted cause of inflation, and modern economic theory describes three types of inflation, viz cost-push inflation, demand-pull inflation and monetary inflation.

Cost push inflation is due to wage increases that cause businesses to raise prices to cover higher labor costs, which lead to demand still for higher wages(the wage-price spiral). Generally, a surge in oil prices is the major cause for inflation in India as it is dependent upon imports to meet its energy needs.

Demand-pull inflation results from increasing consumer demand financed by easier availability of credit.

Monetary inflation caused by the expansion in money supply such as printing more money by government to cover its deficit. There are many other important terms related to a inflation such as deflation, hyperinflation and stagflation.

1.What is inflation?
a)Rapid and sustained increase in price level.
b)Reduction of purchasing power
c)Fall in value of money
d)Galloping rise in CPI.
e)None of these

2.The maximum negative impact of inflation is on
a)A daily earner
b)Business class
c)A household
d)Fixed-wage earners
e)None of these

3.How does inflation affect domestic saving?
a)It increases upward
b)It is not affected
c)It depends on the saving habit of people
d)It causes a downfall in savings
e)None of these

4.An increase in the price of food grains due to crop failure results into which of the following?
a)Deflation
b)Stagflation
c)Inflation
d)All of the above
e)None of these

5.What impact does inflation exert on interest rates?
a)It has an immediate impact on interest rates
b)It results in falling of interest rates.
c)It leads to increase in interest rates.
d)It has no impact on interest rates.
e)None of these.

Directions(6-10): Select the word which is most nearly the SAME in meaning as the word printed in bold as used in the passage.

6.Sustained
a)Nourished
b)Continued
c)Resist
d)Bearing
e)None of these

7.Deflation
a)Diminish
b)Discourage
c)Downfall
d)Distraction
e)None of these

8.Optimism
a)Thinking
b)Hope
c)Desire
d)Consumption
e)None of these

9.Recession
a)Recede
b)Slowness
c)Negation
d)Deduction
e)None of these

10.Deficit
a)Downward
b)Decide
c)Shortage
d)Backward
e)None of these

Answers
1.a
2.d
3.d
4.e
5.c
6.b
7.e
8.b
9.e
10.c