Read
the following passage carefully and answer the questions given below it. Certain
words are printed in bold to help you to locate them while answering some of
the questions.
In
a reversal of the norm elsewhere, in India policymakers and economists have
become optimists while bosses do the worrying. The country’s Central Bank has
predicted that the country’s economy is likely to grow at a double digit rate during
the next 20-30 years. India has the capability with its vast labour and lauded entrepreneurial
spirit. But he private sector which is supposed to do the heavy lifting that
turns India from the world’s tenth largest economy to its third largest by 2030
has become fed up. Business people often carp bout India’s problems but their irritation
this time has a nervous edge. In the first quarter of 2011, GDP grew at an annual
rate of 7.8%; in 2005-07 it managed 9-10%. The economy may be slowing naturally
as the low interest rates and public spending that got India through the global
crisis are belatedly withdrawn. At the same time the surge in inflation caused by
exorbitant food prices has spread more widely, casting doubts over whether
India can grow at 8-10 % in the medium term without overheating.
In
India, as in many fast growing nations, the confidence to invest depends on the
conviction that the long term trajectory is intact and it is that which is in doubt.
Big Indian firms too sometimes seem happier to invest abroad than at home, in
deals thatare often hailed as symbols of the country’s growing clout but
sometimes speak to its weaknesses – purchases of natural resources that India
has in abundance but struggles to get out of the ground. In fact a further dip
in investment could be self fulfilling: if fewer roads, ports and factories are
built, this will hurt both short term growth figures and reduce the economy’s
long term capacity.
There
is a view that because a fair amount of growth is assured the government need
to try very hard. The liberalization reforms that began in 1991 freed markets
for products and gave rise to vibrant competition, at the same time what
economists call factor markets, those for basic inputs like land, power, labour
etc. remain unreformed and largely under state control, which creates
difficulties. Clearances today can take three to four years and many employers
are keen to replace workers with machines despite an abundance of labour force.
This can be attributed to labour laws which are inimical to employee creation
and an education system that means finding quality manpower a major problem. In
fact the Planning Commission, concluded that even achieving 9% growth will need
marked policy action in unreformed sectors. Twenty years ago it was said
that the yardstick against which India should be measured was its potential and
it is clear that there remains much to do.
1.
What is the state of India’s basic input sectors at present?
a)
These sectors attract Foreign Direct Investment because of their vast potential.
b)
These sectors are lagging as projects are usually awarded to foreign companies.
c)
These sectors are stagnating and badly in need of reforms.
d)
These sectors are well regulated as there are governed by the State
2.
Which of the following can be said about the Indian economy at present?
a)
It can comfortably achieve doubel digit growth rate at present.
b)
High food prices have led to overheating of the economy.
c)
Citizens are affluent owing to laxity in regulation.
d)
Unreformed sectors are a drag on economic growth.
3.
Which of the following is most opposite in meaning to the word MARKED given in bold as used in the
passage?
a)
Decreased b) Ignored c) Clear
d)
Assessed
Read
the following passage carefully and answer the questions given below it. Certain
words have been printed in bold to help you to locate them while answering some
of the questions.
The
great fear in Asia a short while ago was that the region would suffer through
the wealth destruction already taking place in the U.S. as a result of the financial
crisis. Stock markets tumbled as exports plunged and economic growth deteriorated.
Lofty property prices in China and elsewhere looked set to bust as credit
tightened and buyers evaporated. But with surprising speed, fear in Asia
swung back to greed as the regin shows signs of recovery and property and stock
prices are soaring in many parts of Asia.
Why
should this sharp Asian turn around be greeted with skepticism? Higher
asset prices mean households feel wealthier and better able to spend, which could
further fuel the region’s nascent rebound. But just as easily, Asia could soon find
itself saddled with overheated markets similar to the U.S. housing market. In short,
the world has not changed, it has just moved placed.
The
incipient bubble is being created by government policy. In response to the
global credit crunch of 2008, Policy makers in Asia slashed interest rates and flooded
financial sectors with cash in frantic attempts to keep loans flowing and economies
growing. These steps were logical for central bankers striving to reverse a
deepening economic crisis but there is evidence that there is too much easy
money around. It’s winding up in stocks and real estate, pushing prices up too
far and too fast for the undenying economic fundamentals. Much of the concern
is focused on China where government stimulus efforts have been large and
effective, Money in China has been especially easy to find. Aggreegate new bank
lending surged 201% in first half of 2009 from the same period a year earlier,
to nearly 51.1 turn on, Exuberance over a quick recovery which was given a
boost by China’s surprisingly strong 7.9% GDP growth in the second quarter hjas
buoyed investor sentiment not just for stocks but also for real estate.
Former
U.S. Federal Reserve Chairman Alan Greenspan argued that bubbles could only be
recognised in hand sight. But investors who have been well schooled in the
dangers of bubbles over the past decade are increasingly wary that prices have
risen too far and that the slightest bit of negative, economic news could knock
markets for a loop. These fears are compounded by the possibility that Asia’s central
bankers willbegin taking stops to shut off the money. Rumours that Beijing was
on the verge of tightening credit led to Shanghai stocks plunging 5%. Yet many economists
believe that, there is close to a zero possibility that the Chinese government
will do anything this year that constitutes tightening. And without a major
shift in thinking, the easy-money conditions will stay in place. In a global economy
that has produced more dramatic ups and downs than anyone thought possible over
the past two years. Asia may beneading for another disheartening plunge.
4.
What does the author want to convey through the phrase “The world has not
changed it has just moved places”?
a)
At present countries are more dependent on Asian economies than on the US
economy
b)
Economies have become interlinked on account of globalisation
c)
Asian governments are implementing the same economic reforms as developed
countries
d)
None of these
5.
Which of the following can be said about the Chinese government’s efforts to
revive the economy?
a)
These were largely unsuccessful as only the housing market improved
b)
The governments only concern was to boost investor confidence in stocks
c)
These efforts were ineffectual as the economy recovered owing to the US market
stabilising
d)
These were appropriate and accmplished the goal of economic revival
6.
What do the statistics about loans given by Chinese banks in 2009 indicate?
a)
There was hardly any demand for loans in 2008
b)
The Chinese government has borrowed funds from the US
c)
China will take longer than the US to recover from the economic crisis
d)
None of these
7.
What is the author’s main objective in writing the passage?
a)
Illustrating that Asian economies are financially more sound than those of
developed countries
b)
Disputing financial theories about how recessions can be predicted and avoided
c)
Warning Asian countries about the dangers of favouring fast growth and
profits
over sound economic-principles
d)
Extoiling China’s incredible growth and urging other countries to emulate it
8.
Why does the author doubt the current resurgence of Asian economics?
a)
Their economies are too heavily reliant on the American economy which is yet to
recover
b)
Central banks have slashed interest rates too abruptly which is likely to cause
stock markets to crash
c)
With their prevailing economic conditions they are at risk for a financial crisis
d) Their GDP has not grown significantly
during the last financial year
ANSWERS:
1. Option C
2. Option D
3. Option B
4. Option D
5. Option D
6. Option D
7. Option C
8. Option C
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