Q.1-10. Read the following passage carefully and answer the
questions given below it. Certain words have been printed in bold to help you
locate them while answering some questions.
The Reserve Bank of India’s move to curb currency
volatility, even if it may eventually come at the cost of higher borrowing
rates for consumers, clearly mirrors the sense of urgency among India’s
monetary and fiscal authorities to stem the rupee’s slide.
A sliding rupee is toxic. For a start, it means that India
needs to shell out more cash to import fuel, and this in turn raises the prices
of transporting goods, leading to higher inflation.
And high inflation means that the RBI will hesitate to cut
interest rates, a step needed to boost economic growth. So, consumers need to keep
paying large chunks of their income every month towards repaying housing loans,
even as the cost of food and petrol rises and the prospects of decent salary
hikes recede because the economy is struggling. It’s not just households.
Companies that import raw materials are badly hurt, and this will further mirror economic growth.
India’s wholesale price index (WPI)-based inflation, the
country’s main gauge for economy-wide price movements, inched up to 4.86% in
June, reversing a four-month falling trend on higher food prices.
A sub-5% WPI-inflation is still well within the RBI’s
comfort zone, but with high retail inflation that looks good to canter well
into double digits this month, the central bank will unlikely slash lending
costs in its July 30 review meet. Estimates show that a sustained 10% rupee
depreciation, adds roughly 1 percentage point to headline wholesale price
inflation. Higher diesel and petrol prices would knock up the cost of ferrying goods, including food items,
across locations, which, in turn will push up overall prices. It’s not just
soaring fuel costs that will push food prices up. A weak rupee will raise
prices for most manufactured and imported goods — a large component of a
household’s monthly grocery consumption such as pulses and edible oil. For
instance, India is a net importer of pulses — a key staple for most families.
A weak rupee means it will push up the cost of essential
food items. Eating out could be even costlier as restaurant owners are likely
to jack up rates to cover for rising processed food and cooking fuel costs.
Edible oil and pulses import grew sharply by 15.5% and
26.21% respectively in 2012-13 compared to the previous year, driven by flat
domestic production and rising consumption demand. A weak rupee will raise the
landed costs of these staples.
The rupee is falling because foreign investors are selling
the currency, preferring instead to plough into the US market, which is showing
signs of resurgence.
The RBI’s moves, at the very least, are clearly targeted at
curbing punters from dominating the currency market. It’s important to keep
speculators at bay, because too much
is at stake for the Indian economy.
Q.1. How is the slide in rupee related to the cost of eating
out?
01. One will be given
discount by the restaurant owners if the slide in rupee continues.
02. One has to manage all other expenses within
one’s meager income.
03. Restaurant owners
might have to shut down their restaurants owing to rising cost
of food items.
04. Restaurant owners would pass on the increased
cost of food items and cooking fuel to the customers.
05. The two are not related at all.
Q.2. Describe the significance of India’s wholesale price
index (WPI)?
01. It is used to measure
economy-wide price movements.
02. It is used to keep control over wholesale
market of goods.
03. It is used to measure relationship between the
currency of one country and of
others.
04. It is used to determine the price of goods in
the wholesale and retail market
05. Not mentioned in the passage.
Q.3. Which of the following is/are consequences of
volatility in rupee?
(A) Inflation rate
goes up.
(B) Importing goods
and services becomes expensive.
(C) Good salary hike
cannot be expected due to poor economic growth.
(D) All sorts of
investments earn good profit.
01. Only B
02. Only C and D
03. All except A
04. All except B
05. All except B
Q.4. What is the reason for which India needs to import
pulses?
01. The pulses produced in India do not have very
good quality.
02. Imported pulses sell in India at a very good
price.
03. It is the major food item consumed in most
families in India
04. It is cheap to import pulses than to import
any other food item.
05. India is a country that exports pulses.
Q.5. Which of the following is TRUE in the context of the
passage?
01. RBI may not lower
interest rates if the inflation does not go up.
02. India’s wholesale price index (WPI)-based
inflation went up to 8.46% in June.
03. Increased fuel cost would result in increased
price of food items.
04. RBI is taking measure to control volatility in
dollar.
05. All of the above are false.
Q.6. Why are foreign investors selling the currency which
has led to weakening of rupee?
01. Foreign investors are
not happy with the policies of the government.
02. Foreign investors are not happy with the
policies of the government.
03. Foreign investors are unable to track their
investments due to volatility in the
market.
04. Their investments have give huge profits and
they are no longer interested in
Investing.
05. All of the above
Q.7. Choose the word most SIMILAR in meaning to the word
printed in bold, as used in the passage.
Ferrying
01. Transporting
02. Bearing
03. Running
04. Packing
05. Conveying
Q.8. Choose the word most SIMILAR in meaning to the word
printed in bold, as used in the passage.
At bay
01. Careful
02. Motivated
03. Aside
04. Respected
05. Free
Q.9. Choose the word which is most nearly the OPPOSITE in
meaning as the word printed in bold as used in the passage.
Hurt
01. Disturb
02. Constrain
03. Mischief
04. Tear
05. Boost
Q.10. Choose the word which is most nearly the OPPOSITE in
meaning as the word printed in bold as used in the passage.
Mirrors
01. Assigns
02. Tolerates
03. Manipulates
04. Hides
05. Exhibits
ANSWERS:
1. 4
2. 1
3. 5
4. 3
5. 3
6. 2
7. 1
8. 3
9. 5
10. 4
