English: Reading Comprehension Set 53

Directions(1-10): Read the following passage carefully and answer the questions given below them. Certain words/phrases have been printed in bold to help you locate them while answering some of the questions.

Nearly 18 months after the government’s decision to scrap currency notes of ₹500 and ₹1,000, which accounted for over 86% of the currency in circulation at the time, large parts of India are in the throes of a severe cash crunch again. The government started acting belatedly yesterday in response to reports of cash shortages from States including Telangana, Andhra Pradesh, Karnataka and Madhya Pradesh over a fortnight. Terming the shortage a manifestation of an ‘unusual spurt in currency demand’ over three months, the Finance Ministry has emphasized that the first 13 days of April recorded an increase in currency supply of ₹45,000 crore. Yet, thousands of automated teller machines are either not functioning or not dispensing adequate cash as banks are reluctant to divert cash to them at the cost of customers visiting branches for withdrawals. The Ministry has asserted that over ₹1.75 lakh crore of cash lies in reserves, which may now be deployed to meet the demand. On its part, the Reserve Bank of India has claimed there is enough cash in its vaults, but it has ramped up the printing of all notes. At the same time, it blamed the shortages on logistical issues of replenishing ATMs and said it is moving more cash to regions that witnessed high cash withdrawals.
Theories abound on how upcoming elections, starting with Karnataka and possibly ending with the Lok Sabha polls in 2019, have prompted a large-scale cash management exercise among political parties. Part of the retail love for cash is also being attributed to depositor fears about the impending Financial Resolution and Deposit Insurance Bill that makes it possible to deploy investor savings to bail out stressed banks and financial institutions. There could be some truth in these explanations, but the genesis of the current cash crisis is firmly rooted in the lack of system-wide thinking that went into the Centre’s big-bang note ban gambit. The government may have chosen to go for ₹2,000 notes post-demonetisation to remonetize the economy faster, but with lower denomination notes taking longer to flow freely, circulation wasn’t efficient and the big note has become a preferred mode for hoarding capital. That a plan to re-introduce ₹1,000 notes was later junked didn’t help; nor did the difference in the sizes of the new notes. As the RBI noted on Tuesday, recalibration of ATMs is still under way for the ₹200 note. Demonetisation may have been aimed at weeding out black money, but perpetuating dependency on the ₹2,000 note ignores an age-old heuristic for currency management that every denomination should be 2 to 2.5 times its preceding denomination. The current cash crunch shows how the consequences of the overnight demonetisation of November 8-9, 2016 continue to haunt us.

  1. Which of the following statements can be inferred from the passage?
    A. The South Indian states like Karnataka and Tamil Nadu are experiencing much severe cash crunch as compared to their North Indian counterparts.
    B. Banks give priority of cash to the customers coming in bank branches to withdraw cash than those visiting the ATMs
    C. Government does not plan to re-introduce ₹1,000 notes
    B and C
    A and B
    A and C
    Only B
    All A, B and C
    Option A
    B is true because:
    “Yet, thousands of automated teller machines are either not functioning or not dispensing adequate cash as banks are reluctant to divert cash to them at the cost of customers visiting branches for withdrawals.”
    C is true because:
    “That a plan to re-introduce ₹1,000 notes was later junked didn’t help…”
    A is not true because no comparison about the north Indian and South Indian states is done in the passage.

     

  2. What is it in the Financial Resolution and Deposit Insurance Bill that the depositors fear of?
    The regular delay in the implementation of the Bill is inducing insecurity among the depositors
    The feature of the bill that enables the government to provide the depositor money to bail out stressed banks
    The lower denomination notes are taking unusual delay in floating in the market
    The depositors are worried that money by the foreign investors may be utilized to bail out the stressed banks thereby reducing the interest rates provided by the banks
    According to the bill, it will become mandatory for the depositors to get the money insured.
    Option B
    Refer to “Part of the retail love for cash is also being attributed to depositor fears about the impending Financial Resolution and Deposit Insurance Bill that makes it possible to deploy investor savings to bail out stressed banks and financial institutions.”

     

  3. What is empirical for management of currencies?
    The larger denomination should be at least twice up to two and a half times the smaller denominations
    The preceding denomination should be at least twice up to two and a half times the denomination succeeding it
    The smaller denomination should be at least twice up to two and a half times the larger denominations
    The succeeding denomination should be at least twice up to two and a half times the denomination preceding it
    The larger denominations should be more than the smaller ones
    Option D
    Refer to “Demonetisation may have been aimed at weeding out black money, but perpetuating dependency on the ₹2,000 note ignores an age-old heuristic for currency management that every denomination should be 2 to 2.5 times its preceding denomination.”

     

  4. What/who does the RBI blame for cash shortage?
    Demonetization
    Government Policies
    Recalibration of ATMs
    Logistics
    Cash Hoarders
    Option D
    Refer to “At the same time, it blamed the shortages on logistical issues of replenishing ATMs and said it is moving more cash to regions that witnessed high cash withdrawals.”

     

  5. The author’s writing style in the passage is _______________.
    Expository
    Descriptive
    Narrative
    Persuasive
    Analytical
    Option D
    In Expository style of writing, the author doesn’t express his opinions. But here the author has expressed his opinion, thus it is not an expository style of writing.
    In narrative style of writing, a story/plot unravels. Thus, this is not narrative.
    In Analytical style of writing, numbers and data are given and analyzed. Thus, it is not analytical.
    In Descriptive, the author describes everything in great detail using the five senses. Thus, this is not descriptive.
    In persuasive, the author tries to persuade or convince the reader of his point of view and supports his stand using data, studies, etc.
    Statements like:
    “Demonetisation may have been aimed at weeding out black money, but perpetuating dependency on the ₹2,000 note ignores an age-old heuristic for currency management that every denomination should be 2 to 2.5 times its preceding denomination.” are mentioned to persuade the reader for the author’s stand.

     

  6. Why does the author feel that the consequences of demonetization still haunt us?
    Because 2000 rupee notes are being hoarded
    Because a cash crunch is experienced
    Because smaller denomination notes are less in circulation
    Because the ATMs are not yet recalibrated
    All of the above
    Option B
    Refer to “The current cash crunch shows how the consequences of the overnight demonetisation of November 8-9, 2016 continue to haunt us.”

     

  7. Choose the word which is most similar in meaning to the word ”throes” as used in passage.

    Middle
    Mild
    Suffering
    Crux
    Onus
    Option C
    Throes means suffering/pain.

     

  8. Choose the word which is most similar in meaning to the word ”heuristic” as used in passage.
    Theory
    Experiential
    Dilemma
    Quandary
    Naive
    Option B

     

  9. Choose the word which is most opposite in meaning to the word ”belatedly” as used in passage.
    Undoubtedly
    Untimely
    Lethargically
    Tardily
    Promptly
    Option E
    ”Belatedly” means slowly. Promptly is the opposite.

     

  10. Choose the word which is most opposite in meaning to the word ”perpetuating” as used in passage.
    Blocking
    Flowing
    Continuing
    Filtering
    Looming
    Option A

     

 

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