Everything From A Single Para English Aptitude Test- The Mint Opinion 04/09/2019
These Questions Completely based on Single “The Mint” Opinion. 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 : 04 September 2019
Subject: A key piece in India’s slowdown puzzle that has gone unnoticed
Title: While the slump debate has focused mostly on monetary and fiscal policies, our monetary dynamics offer a crucial insight
The recent collapse in automobile sales is one symptom of the aggregate demand shock that has hit the Indian economy. The government said last week that the economy expanded in the three months to June at its slowest rate in 25 quarters. There has been an ongoing debate on whether the slowdown emanates from the supply side or the demand side. The answer lies in the inflation trend.
Consumer price inflation was in double digits during the previous downturn in 2013. It is now one percentage-point below the inflation target of 4%. Even core inflation has come down sharply, as companies lost pricing power because of weak demand. In a very simple analytical framework, slow growth with high inflation suggests supply-side rigidities, while slow growth with inflation below target suggests demand weakness.
So, 2019 is quite different from 2013.
The sharp slowdown in output growth combined with low inflation has pushed nominal gross domestic product (NGDP) growth to perhaps its lowest level in 15 years. This has potentially serious consequences if there is no quick recovery. First, the cost of borrowing for most companies will be higher than nominal growth.
Second, the budget estimates for tax collection are also at risk, though a wider fiscal deficit because of a revenue shortfall could act as an automatic stabilizer.
Much of the debate till now has remained focused on whether macroeconomic policy needs to be eased through some combination of a higher fiscal deficit, lower interest rates, a weaker rupee and structural reforms.
However, this column looks at another set of data that has not received enough attention in recent discussions about the slowdown. It is worthwhile to look at monetary data as well, especially how much money is available for economic transactions, how people choose to hold this money, and how rapidly it is circulating in the economy.
Here are a few monetary facts from the annual report released by the Reserve Bank of India (RBI) last week.
First, reserve money in the 12 months to June grew at 14.5%, or close to its average over the past decade. Also, the Indian central bank expanded its balance sheet faster than the growth in nominal GDP, mainly through open market operations rather than dollar buying.
Second, the growth in the RBI balance sheet was largely driven by the rapid increase in currency in circulation, which accounted for 87% of the increase in reserve money. Some of this could be explained by higher demand for cash in an election year, but a large part must be because of the remonetization of economic activity.
Third, growth in broad money (M3) was slower than growth in reserve money by almost four percentage points. In other words, the incremental money multiplier was less than one. The overall money multiplier, or the ratio of broad money to reserve money, has fallen to its levels before demonetization. It was at 5.68 in 2018-19.
Fourth, the money multiplier by itself provides few analytical cues. The key to understanding what has happened is to take a look at another monetary ratio—currency with the public as a proportion of bank deposits, which depends on individual behaviour. It has gone up from 1.25 in 2016-17 to 1.41 in 2018-19, as people have rebuilt their cash holdings. This is inversely related to the money multiplier.
Fifth, the income velocity of broad money has climbed, but the income velocity of narrow money has fallen. Narrow money is cash and demand deposits. Narrow money is circulating at a slower pace in the economy. It is perhaps another indication that people have been rebuilding their cash holdings in recent quarters, especially since lower interest rates reduce the opportunity cost of holding paper money as opposed to keeping it in bank deposits.
The simplified bottom line is as follows. Indians are reverting to the old habit of holding large amounts of cash, though the rise of digital money is a welcome change. The rebuilding of cash holdings after the demonetization shock has altered several key monetary ratios, from the money multiplier to the income velocity of narrow money.
The key behavioural parameters that drove the formation of monetary aggregates converged gradually towards their demonetization trends during 2018-19,” the central bank said in its annual report. It is not clear whether the normalization of monetary parameters has led to the disinflationary demand slowdown or whether it is the other way around. That requires more careful statistical analysis.
In a prescient article written in November 2016, Avinash Tripathi of The Takshashila Institution had brilliantly anticipated some of these monetary developments: “It is true that the current shortage of currency in India is temporary and it is hoped that the economy will bounce back once liquidity conditions improve. But by that time, the velocity of money will slow down because people will hoard cash rather than spend it, an output gap… will develop, deflationary expectations will have set in and the economy would be in a slowdown mode.” Seems familiar?
There are multiple ways to look at any economic downturn, from the impact of global shocks to a domestic credit squeeze to policy errors to depressed expectations. However, the role of monetary dynamics in such downturns should not be ignored. The ongoing Indian debate should take this into account.
Directions (1-3) Choose the similar meaning
Directions: (4-5) choose the opposite meaning
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. Growth in broad money (M3) was slower then growth in reserve money by almost four percentage points.
b)slower than growth
c)slower then growth
d)slower from growth
Q7. Some this could be explained by higher demand for cash in an election year, but a large part must be because of the remonetization of economic activity.
a)Any this could
b)Any of this could
c)Some this could
d)Some of this could
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.
The simplified bottom line is as follows. Indians are …………..8………to the old habit of holding large amounts of cash, though the rise of digital money is a welcome change. The ………9…….. of cash holdings after the demonetization shock has altered several key monetary ratios, from the money multiplier to the income …….10…….of narrow money.
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. The key behavioural parameters that(a)/ drove the formation of monetary(b)/ aggregates converged gradually (c)/towards their demonetization trends during 2018-19(d)/(e)/
Q12. Many of the debate till now has remained(a)/ focused on whether macroeconomic policy needs(b)/ to be eased through some combination of a higher(c)/ fiscal deficit, lower interest rates, a weaker rupee and structural reforms(d)/(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) It is now one percentage-point below the inflation target of 4%.
b) Even core inflation has come down sharply, as companies lost pricing power because of weak demand.
c) In a very simple analytical framework, slow growth with high inflation suggests supply-side rigidities, while slow growth with inflation below target suggests demand weakness.
d) The sharp slowdown in output growth combined with low inflation has pushed nominal gross domestic product (NGDP) growth to perhaps its lowest level in 15 years.
e) Consumer price inflation was in double digits during the previous downturn in 2013.
Q13. Which is the Second step after rearrangement?
Q14. Which is the Third step after rearrangement?
Q15. Which is the Fourth step after rearrangement?
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. The recent …………. in automobile sales is one symptom of the aggregate demand shock that has hit the Indian economy.
Q17. In other words, the ………. money multiplier was less than one.
Directions (18-20): Answer the questions given below based on the passage.
Q18. According to passage how NGDP reached to its lowest level?
a)sharp slowdown in output
d)both a & b
Q19. According to passage on what Central bank has said in its annual report?
a)Lower interest rates reduce the opportunity cost of holding paper money as opposed to keeping it in bank deposits
b)Indians are reverting to the old habit of holding large amounts of cash
c)normalization of monetary parameters has led to the disinflationary demand slowdown
d)both b & c
Q20. Which of the following statements is/are true in context of the passage above?
(I)growth in broad money (M3) was slower than growth in reserve money by almost four percentage points
(II economy will not bounce back once liquidity conditions improve
(III)There are multiple ways to look at any economic downturn, from the impact of global shocks to a domestic credit squeeze
a) Only (III)
b) Both (I) and (III)
c) Both (II) and (III)
d) All are incorrect
Ans.1, c it means (of a feeling, quality, or sensation) issue or spread out from (a source).
Ans.2, b it means Rigidity is a quality found in people and objects that don’t bend.
Ans.3, a it means a thing used to keep something steady or stable.
Ans.4, c worthwhile means worth the time, money, or effort spent; of value or importance.
Meritless means worthless or undeserving.
Ans.5, a cue means a thing said or done that serves as a signal to an actor or other performer to enter or to begin their speech or performance. Rejoinder means a reply, especially a sharp or witty one.
Ans.6, b use than in place of then.
Then has a number of different functions, but it is most commonly used as either an adverb or an adjective. Below are a few examples of its many meanings and uses.
At that time.
I was at work then.
Ans.7, d Some and some of
Before another determiner or a pronoun, we use some of.
I know some of his friends. (NOT I know some his friends.)
Some of us want a new system. (NOT Some us want a new system.)
Before a noun without a determiner, we use some.
Some people are very ambitious. (NOT Some of people are)
Ans.8, d it means return to (a previous state, practice, topic, etc.).
Ans.9, b it means build (something) again after it has been damaged or destroyed.
Ans.10, c it means the speed of something in a given direction.
Ans.11, e no error.
Ans.12, a use much in place of many
Use much if the noun is non-countable (e.g., water, sand). Use many if the noun is countable (e.g., oranges, children). For example:
I don’t have much money.
They own many houses.
Phillip owns many properties in France.
We didn’t earn much profit this year.
Ans.13, a is correct. Because the correct sequence is EABCD
Ans.14, b is correct.
Ans.15, c is correct.
Ans.16, c it means to fall or shrink together abruptly and completely : fall into a jumbled or flattened mass through the force of external pressure.
Ans.17, d it means relating to or denoting an increase or addition, especially one of a series on a fixed scale.
Ans.18, d according to passage d is correct.
Ans.19, c according to passage c is correct.
Ans.20, b according to passage b is correct.