Everything From A Single Para English Aptitude Test- The Mint 03/09

The Mint

Everything From A Single Para English Aptitude Test- The Mint 03/09

 

These Questions Completely based on Single “The Mint” Editorial. The purpose to start this is to make you read the same paragraph again and again to understand the different types of questions like comprehension, cloze test, sentence arrangement, sentence improvement, vocab, antonyms, synonyms, fillers (all based on single paragraph) etc. Reading this paragraph while practicing these questions will help you understand.

The Mint : 03 September 2019

Subject:  Cryptocurrencies could constrain a country’s choices

Some weeks ago, there was news of Facebook launching a cryptocurrency called Libra, designed to appeal to its global user base of over 2 billion. Unlike Bitcoin, which is a roller coaster, Libra will be backed by a basket of fiat currencies.

It is supported by a consortium of large-scale corporate houses, financial services firms and venture capitalists.
Net-savvy millennials have little patience for expensive traditional banking methods for cash transactions. They would likely flock to alternatives like Libra. Other Big Tech companies like Google and Amazon are unlikely to stay on the sidelines.
At the time, I wrote in this column that governments worry about their sovereign currencies and will eventually regulate Big Tech cryptocurrencies. Governments not only manage their exchange rates and liquidity, they must try to restrict money laundering and terror financing.
I apologize for the heavy reading that is about to ensue. I have simplified some of the concepts here, but as Einstein once said of science: “Everything should be made as simple as possible, but no simpler.”
International economics has a concept called the “impossible trinity” or the “trilemma” of monetary policy. It was first defined (independently) by economists John Fleming and Robert Mundell in the early 1960s. It states that it is impossible to have all three of the following conditions fulfilled at the same time: (1) a fixed foreign exchange rate, (2) free capital movement (that is, an absence of capital controls) and (3) an independent monetary policy (which controls domestic money supply, mainly through an interest-rate regime).
Even before cryptocurrencies, governments looking to control the monetary aspects of their economies have been subject to this trilemma, and have thus been forced to implement only two of the three conditions, while jettisoning the third. Simply stated, if you want control over both your exchange rate and monetary policy, you would have to impose controls on free capital movement. Hence the existence of capital controls such as India’s Foreign Exchange Management Act.
The trilemma is a theory based on the “uncovered interest rate parity condition” and is supported by evidence-based studies where governments that have tried to simultaneously pursue all three goals have failed.
To explain, the uncovered interest rate parity condition means that if a dollar can only fetch a 1% rate of return in the US, but say 6% in India (at the same levels of risk), investors are bound to move from dollars to rupees. The reason they don’t is that the differential of 5% will likely reduce to zero as a result of a slide in the rupee’s value to the extent of its current interest differential against the dollar.
In 1999, Paul Krugman, the Nobel laureate economist, commented: “The point is that you can’t have it all. A country must pick two out of three.
It can fix its exchange rate without emasculating its central bank, but only by maintaining controls on capital flows (like China); it can leave capital movement free but retain monetary autonomy, but only by letting the exchange rate fluctuate (like Britain or Canada); or it can choose to leave capital free and stabilize the currency, but only by abandoning any ability to adjust interest rates to fight inflation or recession (like most of Europe).”
Strong capital controls have meant that other means of payment have been in use before, such as the infamous “hawala” system. Law enforcement agencies track these down relentlessly.
However, the ease of use and the scope of new Big-Tech cryptocurrencies are about to create global currencies of a completely different class. Economists Pierpaolo Benigno, Linda Schilling and Harald Uhlig, in a recent paper, argue that such currencies will inexorably affect the exchange rates and monetary policies of traditional currencies. This is primarily because the introduction of a global digital currency obliterates the capital control levers that sovereign nations have today.
The economists begin with a model that considers a two-country system. Both use their own national currencies as well as a global cryptocurrency.
Assuming markets are efficient and complete, and that the global cryptocurrency is freely used in both countries, they show that the interest rates in both countries must necessarily be equal, and that the exchange rate between the two countries becomes what is termed a “martingale”.
A martingale is a sequence of variable numbers where the next number in the sequence, given all prior numbers, is most likely the same as the present value. Simply put, it means that the best predictor of tomorrow’s value would be today’s value.
Benigno, Schilling and Uhlig call this phenomenon Crypto-Enforced Monetary Policy Synchronization. or Cemps. This adds a further restriction to the impossible trinity, effectively making it a dilemma (where the choice is either one or the other, not any two out of three).
The economists then go on to introduce a number of conditions to correct for the fact that nation states and their central banks are likely to try a variety of methods to control exchange rates, interest rates and capital flows. They show, with beautiful mathematical proofs, that in each case, the trilemma is reduced to a dilemma.

Directions (1-3) Choose the similar meaning
Q1. Consortium
a)club
b)chamber
c)partnership
d)all
e)None

Q2. Trinity
a)three
b)trio
c)neutrino
d)all
e)None

Q3. Jettisoning
a)longer
b)wanted
c)ditch
d)all
e)None

Directions: (4-5) choose the opposite meaning
Q4. Synchronization
a)dolor
b)rift
c)asynchrony
d)all
e)None

Q5. Emasculating
a)supine
b)strengthen
c)global
d)all
e)None

Direction (6-7): Which of the following phrases given below each sentence should replace the phrase printed in bold letters to make the sentence meaningfully correct. Choose the best option among the five given alternatives that reflect the correct use of phrase in the context of the grammatically correct sentence. If the sentence is correct as it is, mark “No Error” as your answer.
Q6. Governments not only manage its exchange rates and liquidity, they must try to restrict money laundering and terror financing.
a)its exchange
b)their exchange
c)exchange
d)those exchange
e)None

Q7. At the time, I wrote in this column that governments worry about their sovereign currencies and will eventually regulate Big Tech cryptocurrencies.
a)At that time
b)At the time
c)At time
d)the time
e) None

Directions (8-10): In the passage given below there are blanks which are numbered from 8 to 10. They are to be filled with the options given below the passage against each of the respective numbers. Find out the appropriate word in each case which can most suitably complete the sentence without altering its meaning. If none of the words given in options fits in, mark ‘None of these’ as your answer choice.
Benigno, Schilling and Uhlig call this ………8……… Crypto-Enforced Monetary Policy Synchronization. or Cemps. This adds a further ………9………. to the impossible trinity, effectively making it a ………..10……… The economists then go on to introduce a number of conditions to correct for the fact that nation states and their central banks are likely to try a variety of methods to control exchange rates, interest rates and capital flows.
Q8.
a)chasm
b)fugitive
c)various
d)phenomenon
e)None

Q9.
a)buckle
b)restriction
c)stake
d)all
e) None

Q10.
a)system
b)dilemma
c)confusion
d)all
e) None

Directions (11-12): Read each of the following sentences to find out if there is any grammatical error in it. The error, if any, will be in one part of the sentence. The number (A, B, C or d) of this part is your answer. If there is no error in the statement, then mark option (e) as your answer choice.
Q11. Both use(a)/ their own national(b)/ currencies a(c)/ global cryptocurrency(d)/(e)/
a) A
b) B
c) C
d) D
e) E

Q12. However, the ease of use and(a)/ the scope of new Big-Tech cryptocurrencies(b)/ are about to create global (c)/currencies of a completely different class(d)/(e)/
a) A
b) B
c) C
d) D
e) E

Directions (13-15): Rearrange the following sentences (a), (b), (c), (d), and (e) in the proper sequence to form a meaningful paragraph and then answer the questions given below.
a) Argue that such currencies will inexorably affect the exchange rates and monetary policies of traditional currencies.
b) Economists Pierpaolo Benigno, Linda Schilling and Harald Uhlig, in a recent paper.
c) However, the ease of use and the scope of new Big-Tech cryptocurrencies are about to create global currencies of a completely different class.
d) Strong capital controls have meant that other means of payment have been in use before, such as the infamous “hawala” system.
e) Law enforcement agencies track these down relentlessly.
Q13. Which is the Second step after rearrangement? 

a) A
b) B
c) C
d) D
e) E

Q14. Which is the Third step after rearrangement?
a) A
b) B
c) C
d) D
e) E

Q15. Which is the Fourth step after rearrangement?
a) A
b) B
c) C
d) D
e) E

Directions (16-17): In each of the following sentences, there is a blank space. Below each such sentence, there are four options with one word each. Fill up the blank with the word that makes the sentence grammatically and contextually correct. If none of the four words is your answer, choose option (e) as your answer choice.
Q16. I have …………… some of the concepts here, but as Einstein once said of science Everything should be made as simple as possible but no simpler
a)mob
b)gusty
c)simplified
d)all
e)None

Q17. A ………. is a sequence of variable numbers where the next number in the sequence, given all prior numbersis most likely the same as the present value.
a)spine
b)martingale
c)bungle
d)all
e)None

Directions (18-20): Answer the questions given below based on the passage.
Q18. According to passage The trilemma is a theory based on what?
a)uncovered interest rate parity condition
b)financial services firms and venture capitalists
c)sovereign currencies
d)both c & d
e)None

Q19. According to passage on what steps should government take to control over exchange rate and monetary policy?
a)free capital movement
b)a fixed foreign exchange rate
c)impose controls on free capital movement
d)Inculcate the concept impossible trinity
e)None

Q20. Which of the following statements is/are true in context of the passage above?
(I)Governments should manage money laundering and terror financing.
(II)Strong capital controls have meant that other means of payment have been in use before
(III)such currencies will inexorably affect the exchange rates and monetary policies of traditional currencies
a) Only (III)
b) Both (I) and (II)
c) Both (II) and (III)
d) All are correct
e) None

Answers With Explanation

Ans.1, d it means an association, typically of several companies.
Ans.2, d the three persons of the Christian Godhead; Father, Son, and Holy Spirit.
Ans.3, c it means throw or drop (something) from an aircraft or ship.
Ans.4, c synchronization it means the operation or activity of two or more things at the same time or rate. Asynchrony means absence or lack of concurrence in time.
Ans.5, b Emasculate means make (someone or something) weaker or less effective. Strengthen make or become stronger.
Ans.6, b use their in place of its.
Ans.7, b is correct.
Ans.8, d it means a fact or situation that is observed to exist or happen, especially one whose cause or explanation is in question.
Ans.9, b it means a limiting condition or measure, especially a legal one.
Ans.10, b it means a situation in which a difficult choice has to be made between two or more alternatives, especially ones that are equally undesirable.
Ans.11, c As well is an adverb which means ‘also’, ‘too’ or ‘in addition’. We usually use as well at the end of a clause:

We look forward very much to seeing you again and to meeting your wife as well.

As well as is a multi-word preposition which means ‘in addition to’:

She has invited Jill as well as Kate.

When they go to Austria, they like walking as well as skiing.
Ans.12, e no error.
Ans.13, e is correct. Because the correct sequence is DECBA.
Ans.14, c is correct.
Ans.15, b is correct.
Ans.16, c it means make (something) simpler or easier to do or understand.
Ans.17, b it means a gambling system of continually doubling the stakes in the hope of an eventual win that must yield a net profit.
Ans.18, a according to passage a is correct.
Ans.19, c according to passage c is correct.
Ans.20, d according to passage d is correct.

 

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