RBI GRADE ‘B’ OFFICER’S EXAM Held on : 18.12.2011 (Part-II)

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

Why, according to the passage, does food inflation affect people's quality of life?

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

Which of the following statements contradicts the general belief that our country has achieved self-sufficiency in respect of food?

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

Which of the following best explains the phrase, "solutions are rarely permanent" as used in the passage?

(A) Our strategies for overcoming the food shortages in a specific period have proved to be futile subsequently.

(B) The current situation has been a rude reminder of our self-reliance in a specific period in the matter of food.

(C) The general tendency of people to keep themselves well- fed leads to food inflation.

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

What, according to the passage, is DEFINITELY the root cause of problems with global food prices?

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

The example of sugar and wheat helps us to conclude that

(A) Certain commodity-specific factors help perpetuate a general tendency.

(B) Certain commodity-specific factors make the trend go in reverse direction.

(C) The current supply conditions are insensitive to the global trends.

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

Which of the following is/are crucial factor(s) responsible for India's food inflation in the recent period?

(A) Escalating energy prices and rising demand pressures.

(B) Changing scenario all over the world that influences food inflation.

(C) People's inclination to nutritional diversification.

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

Which of the following statement(s) is / are definitely TRUE in the context of the passage?

(A) Past few years' data show that food prices are heavily dependent on monsoon performance.

(B) Increased food prices have exerted an impact on the index and instigated higher wage demands.

(C) In typical Indian house- hold, consumption of food items with high protein- content is on a higher side.

Food inflation is a significant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves welfed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices, including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity specific factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat reflects the effect of persistent drought in some major cultivating areas.

India's food inflation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a big role, although the drivers of inflation in recent months have been energy prices and demand pressures, as reflected in the non-food manufactured products index, food prices contributed significantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider inflationary process through higher wage demands, of which there is some evidence.

It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is sufficient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversification. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, fish and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food inflation in the recent period.

Which of the following best explains the meaning of the two words "fluctuations" and "sensitive" taken together in the context of the passage?