English: Cloze Test for Upcoming Exams – Set 111

Directions: In the passage given below there are 10 blanks. Every blank has five alternative words given in options (A),(B),(C), (D) and (E). You have to tell which word is APPROPRIATE according to the context. Mark that inappropriate word as your answer. If all options are correct, Mark E as your answer.

Among other things, the start of Donald Trump’s presidency this week ____1____ a collision between campaigning rhetoric and legislative and economic reality. What follows will be a learning experience for all, it is ____2____ to say. Though not perhaps the most consequential of the looming reality checks, the outcome of a brewing debate over a proposed border-adjusted tax plan could prove a taste of things to come. As Mr Trump and his Congress work to make policy, there are many ways for things to go ____3____.

Both Mr Trump and congressional Republicans are keen to cut taxes on corporations. America’s inefficient corporate-tax system has remarkably high rates but leaks like a sieve, yielding a pitiful tax____4____. As a solution, Mr Trump favours a large cut in the corporate-tax rate, from 35% to 15%, and a chance for companies to _____5_____ foreign profits at a tax rate of 10%. Paul Ryan, Speaker of the House of Representatives and chief Republican policy____6____, has something very different in mind.

At present American firms are assessed for tax on their global income. This encourages multinationals either to use clever accounting to book profits in foreign subsidiaries, or to “invert”: to relocate their headquarters, at least on paper, to countries with more favourable tax regimes. Mr Ryan’s ____7____ solution is to scrap the tax on corporate income and replace it with a modified value-added tax (VAT). The new tax, assessed at a rate of 20%, would apply to all domestic sales while exempting foreign ones. This “destination-based” system would reduce the ____8____ to move profits or operations abroad. As is common in VAT systems, the plan includes a border adjustment: imports would be subject to the tax while firms would receive a credit for their exports. And that is where things get____9____ .

Many suppose that a VAT, because of the adjustment, provides the countries which use it with an export advantage. Some Republicans have argued in favour of their reform plan on just those grounds. Imposing a 20% VAT means adding 20% to the price of imports while rebating domestic firms 20% of the value of their exports. The combination of import tax and export subsidy certainly sounds like a boon to exporting firms. Yet economists are practically unanimous in their view that it is not.

To see why, imagine that Congress were to impose a universal sales tax on all coffee mugs sold in America, regardless of origin. The tax would have no effect on the price of American coffee mugs sold abroad and therefore would not give a boost to exporting American mugmakers. Suppose the tax were then extended to include foreign sales of American mugs. The American tax would then come on top of whatever sales taxes were in place in foreign markets, leaving the American mugs at a significant disadvantage relative to competitors. The rebate paid to exporters is the way the government prevents what is essentially a national sales tax from penalising domestic firms seeking to compete in foreign markets. A value-added tax with border adjustments has no effect on export competitiveness whatsoever. Sad!

That is not quite the end of the story. Republican leaders do not consider their plan to be a VAT. That is partly because labelling it as such might discomfit rank-and-file Republicans accustomed to seeing VAT as a money-generating machine, fit to support a European-style welfare state. More substantively, Mr Ryan’s reform also exempts labour costs: a practice common in corporate income-tax regimes but not VATs.

Exempting firms’ wage bills would add an additional subsidy to exporters’ rebates, which might cause the plan to run ____10____ of the rules of the World Trade Organisation (or at least to attract a challenge from other countries). Still, the effect of the wage exemption is similar to that of a cut in payroll tax. It can hardly be taken as a ham-fisted attempt to sock it to foreign competitors. Perhaps this should come as no surprise. Mr Ryan unveiled his plan in June of last year, long before election day, in a distant past when Republicans were less supportive of trade restrictions. It is tempting to suspect congressional leaders of trying to slip a non-protectionist tax plan past Mr Trump under the cover of “border adjustment” language.

If so, Mr Trump is on to them. In a recent interview with the Wall Street Journal he criticised the complexity of the plan, adding: “Anytime I hear ‘border adjustment’, I don’t love it.” A more straightforwardly mercantilist policy such as import tariffs might not please him any better, even if he could wring one out of Congress. In a world of flexible exchange rates, policies which reduce demand for foreign goods—and, correspondingly, for foreign currency—generate exchange-rate shifts which offset much of the competitiveness effect.

  1. conceals
    heralds
    portents
    stalwarts
    All are correct
    Option B
    herald = be a sign that (something) is about to happen.
    portent = a sign or warning that a momentous or calamitous event is likely to happen.
    stalwart =
    loyal, reliable, and hard-working.

     

  2. unbiased
    objective
    fair
    resonable
    All are correct
    Option E

     

  3. auspiciously
    regular
    appropriate
    awry
    All are correct
    Option D
    awry = away from the usual or expected course; amiss.

     

  4. reflux
    effect
    take
    cause
    All are correct
    Option C

     

  5. repatriate
    repair
    adhere
    resilient
    All are correct
    Option A
    repatriate = send (someone) back to their own country.
    resilient = able to withstand or recover quickly from difficult conditions.

     

  6. swot
    egghead
    intellectual
    wonk
    All are correct
    Option E
    swot = a person who studies very hard.
    egghead = a highly academic or studious person; an intellectual.
    wonk = a studious or hard-working person.

     

  7. radical
    basic
    important
    liberal
    All are correct
    Option E

     

  8. complementary
    contrary
    incentive
    substitute
    All are correct
    Option C

     

  9. delicate
    difficult
    tricky
    ingenious
    All are correct
    Option E
    ingenious = (of a person) clever, original, and inventive.

     

  10. animosity
    rancor
    brawl
    afoul
    All are correct
    Option D
    animosity = strong hostility.
    rancor = bitterness or resentfulness, especially when long standing.
    brawl = a rough or noisy fight or quarrel.
    afoul = into conflict or difficulty with.

     


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2 Thoughts to “English: Cloze Test for Upcoming Exams – Set 111”

  1. gomathy priya

    thank u mam:)

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