RBI OFFICER GRADE ‘B’ PHASE-I EXAM Held on : 04.09.2016 (Shift-II)(Part-II)

Total Questions: 50

41. Read the following passage carefully and answer the given questions.

From the question (41-43)
There is a parallel universe beyond the confines of China's banking system: shadow banking. This is where borrowers and industries, shunned by banks, look for funding. Regulators look the other way. Until the early 2000s banks accounted for nearly all lending in China, but in the past five years their share has come down to just three-fifths of all new credit. On a conservative estimate, China's shadow financing now adds up to 40 trillion Yuan, nearly two-thirds of its GDP. Compared with advanced economies, this is modest. America's shadow-banking sector is 1.5 times the size of its GDP. But China's shadow assets have increased by more than 30% annually over the past three years compared with less than 10% for the rest of the world, according to the Financial Stability Board. In theory, shadow banks seek higher returns but also take care to manage risks. In practice, it often does not work out like that. China's boom in shadow banking had an innocent enough start. In 2010, regulators reined in bank lending after the credit binge that helped lift the economy out of the global financial crisis. Projects from highways to apartment blocks were left half-finished. To see them through to completion, regulators tolerated an expansion in non-bank financial institutions. It was a work around that seemed to shift risk away from the banks yet kept credit flowing. The most prominent of the shadow lenders were trust companies, versatile institutions that could lend money and take direct stakes. Trusts charged higher rates on loans than banks and also offered higher returns to their wealthy investors (the minimum investment is 1m Yuan.) Today, they hold assets of 16 trillion Yuan, more than the insurance sector. Five years ago, Chinese shadow banking was driven mainly by companies that could not get bank loans. Now it is ordinary people looking for higher returns. It is a vicious cycle. Seeing savers' insatiable appetite for these products banks feel compelled to create yet more and are straying, distant enough from conventional banking to offer higher rates but close enough that their customers. still feel reassured. Shadow banking far from being a new kind of efficient lending, has spread hidden risks throughout the economy and regulators buying their heads in the sand harms conventional banks.
Which of the following is the central theme of the passage?

Correct Answer: (3) Shadow banking is a necessary evil in China's financial system.
Solution:Shadow banking has created a parallel universe beyond the confines of China's banking system. Though high risk is hidden, it supports the Chinese economy.

42. Read the passage

Which of the following has/ have impacted China's traditional banking sector?
(A) Regulators distancing themselves from the shadow banking sector.
(B) Tightened lending regulations for traditional banks.
(C) Growth of online finance.

Correct Answer: (1) Only (A) and (B)
Solution:Shadow banking is where borrowers and industries, shunned by banks, look for funding.

43. Read the passage

Which of the following can be used to replace the phrase "It is a vicious cycle"?

Correct Answer: (4) More and risky financial products and institutions are springing up owing to demand.
Solution:Vicious circle/cycle a situation in which one problem causes another problem which then makes the first problem worse.

44. Each sentence below has two blanks, each blank indicating that something has been omitted. Choose the set of words for the blanks which best fits the meaning of the sentence as a whole.

In its previous budget, the government ___________ at increasing the Gross Domestic Product ___________ enhanced expenditure.

Correct Answer: (2) aimed, through
Solution:Aim = to try or plan to achieve something. It agrees with preposition at.

45. Each sentence below has two blanks, each blank indicating that something has been omitted. Choose the set of words for the blanks which best fits the meaning of the sentence as a whole.

Sources indicate that the primary __________ there have been recent outbreaks of new and unknown diseases __________ the world is deforestation.

Correct Answer: (1) reason, across
Solution:Reason = a cause for something Across = throughout

46. Each sentence below has two blanks, each blank indicating that something has been omitted. Choose the set of words for the blanks which best fits the meaning of the sentence as a whole.

Video conferencing has become the new face of communication __________ various corporate and is believed to be eating __________ the airline industry's profitability.

Correct Answer: (1) between, up
Solution:eat up = to use something in large quantities.

47. Each sentence below has two blanks, each blank indicating that something has been omitted. Choose the set of words for the blanks which best fits the meaning of the sentence as a whole.

Recently, we have heard about many __________ that make us believe that viewing smartphones in the dark __________ be harmful to our eyes.

Correct Answer: (3) instances, could
Solution: Instances examples; particular cases.

48. Each sentence below has two blanks, each blank indicating that something has been omitted. Choose the set of words for the blanks which best fits the meaning of the sentence as a whole.

__________ losing his first two sets in the game of tennis against the State champion, Sham remained __________ and finally won the match.

Correct Answer: (4) Despite, calm
Solution:Despite = Inspite of
Calm = cool and confident

49. Read the following passage carefully and answer the questions.

 

Read the passage (49-50)
Economists agree that foreign trade has afforded big benefits to Britain overall. More recently, as countries like Vietnam and China have become manufacturing giants, consumers have enjoyed cheap imported goods. However, a body of Research on the American company shows that import competi
tion from poor countries can depress the incomes of the low skilled, at least in the short run. Britain's economy is twice as exposed to foreign trade as America's. For the period 2000-07, British workers in industries that suffered from high levels of import exposure to Chinese products earned less. They also spent more time out of employment than those in other industries. Studies also show that a one standard-deviation increase in import competition worsened rates of mental illness by 1.2 percentage points. Unfortunately, the pain tends to be concentrated geographically. In the past decade, the number of over-25s unemployed for more than one year has increased much faster in manufacturing hubs- areas where manufacturing makes up more than 20% of the local economy than in areas where it makes up less. On the ground, the result is clear to see these manufacturing centres are fading- left out of Britain's generally healthy economic growth. It does not have to be this way. The large overall gains from free trade mean it should be possible to compensate its losers. That means "trade adjustment assistance" should work. In Germany, the upgrading the skill of the workforce is the norm and is accomplished through a sophisticated system of apprenticeships. But Amercia's trade adjustment assistance programme which funds training and support for workers displaced by foreign competition and Britain's preferred programme, are feeble. In Britain it is supposed to provide training and support when there are mass redundancies. But it is a murky operation, there are almost no data on what it does. In 2008, its budget was a pitiful (). Data from the OECD, a club mostly of rich countries, suggest that even after accounting for Britain's' low unemployment rate, for years it has been a stingy spender on "active" labour-market policies (i.e. those that seek to improve the skills of the (low-skilled) unemployed, not just let them languish). Until this failure to share the proceeds is corrected, don't expect opposition to globalisation to go away any time soon.
According to the passage, which of the following is/are (an) outcome(s) of the present "trade adjustment assistance"?
(A) A large number of low skill individuals in Britain are still unable to find employment.
(B) The resistance to globalisation of trade will continue in countries like America and Britain.
(C) Rise in incomes of highly skilled individuals.

Correct Answer: (1) Only (A) and (B)
Solution:Low skill individuals in Britain find difficulty in getting employment. Last sentence says something more.

50. Read the passage

Which of the following is the author's view of Britain's manufacturing hubs?

Correct Answer: (4) These are deteriorating and dying on account of globalisation of trade.
Solution:The passage clearly indicates deteriorating state of manufacturing hubs.