Dear Readers, Bank Exam Race for the Year 2018 is already started, To enrich your preparation here we have providing new series of Practice Questions on English language – Section. Candidates those who are preparing for IBPS PO Mains 2018 Exams can practice these questions daily and make your preparation effective.
[WpProQuiz 4318]Direction (1-10): Read the passage carefully and answer the following questions.
Borrowing by public authorities is of recent origin. This practice of revenue raising was not prevalent prior to the eighteenth century. In the middle ages, borrowing was a rare event. Whenever there was urgency, usually a war, the Monarch relied on his hoarded wealth, or borrowed on his own credit.
In modern times, borrowing by the governments has become a normal method of government finance along with other sources like taxation.Public debt refers to the loans raised by government from within or outside the country. Every government has to borrow when its expenditure exceeds its revenue. The borrowing or taking loans by the government is known as public debt.
The government borrows by issuing the Government Bonds and T-Bills (Treasury Bills). It also includes the Market borrowings by the government.
Government debt securities are debt securities issued by the Ministry of Finance or government entities in order to mobilize funds from general public and financial institutions.
Treasury bills, debt restructuring bills are treasury securities having a maturity period of one year or less and sold in the primary market by auction at a discount from face value. Upon maturity the face value will be paid to the holder.
Government bonds are debt securities issued by the government, having a maturity period of one year or longer. The primarily objectives are to finance the budget deficit in each fiscal year or when the expenditures exceed the revenue, to support social and economic development.
State-owned enterprise (SOE) bonds have a maturity period of one year or longer issued by state-owned enterprise (an enterprise in which the state holds for more than 50% of total capital) seeking funds for the state enterprise’s projects.
Financial Institutions Development Fund (FIDF) bonds are debt securities issued by the FIDF for the purpose of rehabilitating and developing financial institutions in order to maintain stability in the financial system.
Government loans are of different kinds, they may differ in respect of time of repayment, the purpose, condition of repayments, method of covering liability etc.
Internal public debt refers to the public loans floated within the country, whereas external debt refers to the obligations of a country to foreign countries or international institutions.
If the case of voluntary debt, people are free to buy public debt at their sweet will. Voluntary loans are provided by the people, willfully. In this case there is no compulsion to lend money to the government. Compulsory debts include those loans which are taken by the government, by using its coercive authority arising out of its sovereign powers. In this case compulsory loan is similar to a tax.
The tax element consists of the difference between the terms of a voluntary and compulsory loan. Compulsory loans create inconvenience, oppression and lack of confidence in the government.
The tax element consists of the difference between the terms of a voluntary and compulsory loan. Compulsory loans create inconvenience, oppression and lack of confidence in the government.
On the other hand, public debt incurred to cover budgetary deficits on revenue account or for purposes which do not yield any direct income to the government is classified as unproductive debt. It is also called dead-weight debt.
Public debt may be redeemable or irredeemable. Redeemable debts are those which the government undertakes to pay back after a fixed period.
Irredeemable debts are not paid back or redeemed and they are not intended to be paid back. But on such debts regular interest is paid by the government. These loans are also known as ‘perpetual debts’.
Funded debts are long term debt created by the government, for generating a permanent capital asset like building, construction equipment, roads etc. Property that creates more property is known as capital asset or it can also be said that the capital asset is the fixed asset employed for generating income. Funded debt is repayable after a specified period of time.
A marketable debt is one in which the debt instruments are negotiable. That is it can be freely bought and sold in the market. Most of the government debts belong to this category.
Besides war, there are several other causes which have brought about great increase in the size of public debts.
The government may borrow to cover budgetary deficit on account of large expenditure incurred on administration and for financing unforeseen events like floods famines epidemics.
Public debt is considered a very important tool for the development of a country. Both developed and developing countries borrow for economic development. Developing countries do not have sufficient resources to finance their plan they therefore borrow not only from within the country but also from foreign sources.
Every country whether a socialist economy or missed economy runs certain public enterprises like railways, postage and telegrams, power work et. Which require large funds, the government can meet them only through public borrowing rather than taxation. On the other hand, it is also true that government borrows to stabilize, to control inflationary conditions. The government borrows to take away excess money supply from the public. Since public borrowing is voluntary. This is a better method than raising taxes.
Redemption of public debt means repayment of debt.
Modern governments make it a point of honour to repay their debts. There are various methods which are followed by the governments to repay their debts. Under the debt conversion method, debt with high interest rate is converted into new debt when the market rate of interest falls. The government borrows at low rate of interest and repays the past debt even before it matures. In the budgetary surplus method, a policy of surplus budget is followed annually for clearing of public debts gradually instead of creating a fund for their repayments on maturity. But in recent years due to the rapidly increasing public expenditure, surplus budget is a rare phenomenon. Under the terminable annuities method, the fiscal authorities clear off a part of the public debt every year by issuing terminable annuities to the bond-holders which mature annually. Thus, it is the method of redeeming debts in installments. By this method, the burden of debt goes on diminishing annually and by the time of maturity it is fully paid off. In additional taxation method, new taxes are imposed to collect revenue for paying the debts. Capital levy refers to a very heavy tax on property and wealth. In fact capital levy is advocated immediately after the war to repay the unproductive war debts.
1) According to the passage, which of the followings cannot be mentioned as a cause for increasing public debt?
a) finance the economic development
b) current account deficit
c) budgetary deficit
d) curbing the inflation
e) finance the public sector enterprises
2) According to the passage, the burden of public debts reduces annually by which of the following debt redemption methods?
a) budgetary surplus method
b) capital levy
c) terminable annuities
d) debt conversion method
e) additional taxation
3) According to the passage, in order to set up the factories for producing advanced equipments and tools for agriculture, which kind of debt does the government create?
a) Long term debts
b) Marketable debt
c) Redeemable debts
d) Compulsory debts
e) Funded debts
4) According to the passage, which of the following debt instruments is issued by the government to finance the budget deficit in fiscal year?
a) Treasury bill
b) SOE bonds
c) FIDF bonds
d) Government bonds
e) Debt restructuring bills
5) Which of the following statements is true in the context of the passage?
a) State-owned enterprise (SOE) bonds have a maturity period of five months.
b) On irredeemable debts, no interest is paid by the government.
c) A marketable debt is one in which the debt instruments are negotiable.
d) None of the above
e) All are true
6) Find the incorrect statement on the basis of the given passage.
a) Redemption of public debt means repayment of debt.
b) Government borrows to stabilize and to control inflationary conditions.
c) Capital levy refers to a very heavy tax on property and wealth.
d) The tax element consists of difference between the terms of a voluntary and funded loan.
e) All are correct
7) Choose the word which as same meaning as the word “coercive”
a) discretionary
b) optional
c) elective
d) imperious
e) voluntary
8) Choose the word which as same meaning as the word “perpetual”
a) provisional
b) impermanent
c) transitory
d) transient
e) incessant
9) Choose the word which as opposite meaning as the word “hoarded”
a) squirreled away
b) put aside
c) thrown away
d) put away
e) hidden away
10) Choose the word which as opposite meaning as the word “oppression”
a) tyranny
b) emancipation
c) subjugation
d) domination
e) repression
Answers:
1) Answer: b)
According to the passage, current account deficit will not be counted as a reason for increasing public debts as it is not given in the passage.
2) Answer: c)
It is clearly mentioned in the passage that by employing the “terminable annuities method” of debt redemption, the burden of public debt diminishes annually.
3) Answer: e)
It is given in the passage that funded debts are created by the government when it has to create the capital assets. Capital assets are the fixed assets employed for generating income. The tools and equipments are capital assets which will be used for producing more output and income.
4) Answer: d)
It is clearly mentioned in the passage that in order to sponsor the budget deficit in financial year, government issues the government bonds.
5) Answer: c)
According to the passage, true statement is “A marketable debt is one in which the debt instruments are negotiable.”
6) Answer: d)
It is mentioned in the passage that the tax element consists of the difference between the terms of a voluntary and compulsory loan. Compulsory loans create inconvenience, oppression and lack of confidence in the government.
7) Answer: d)
The meaning of “coercive” is “imperious/ authoritative/ bossy”.
8) Answer: e)
The meaning of “perpetual” is “nonstop /continuous / incessant”.
9) Answer: c)
The meaning of “hoarded” is “saved/ squirreled away” and its opposite is “thrown away /dumped / disposed of”.
10) Answer: b)
The meaning of “oppression” is “domination /coercion” and its opposite is “liberty / emancipation”.
Daily Practice Test Schedule | Good Luck
| Topic | Daily Publishing Time |
| Daily News Papers & Editorials | 8.00 AM |
| Current Affairs Quiz | 9.00 AM |
| Current Affairs Quiz (Hindi) | 9.30 AM |
| IBPS Clerk Prelims – Reasoning | 10.00 AM |
| IBPS Clerk Prelims – Reasoning (Hindi) | 10.30 AM |
| IBPS Clerk Prelims – Quantitative Aptitude | 11.00 AM |
| IBPS Clerk Prelims – Quantitative Aptitude (Hindi) | 11.30 AM |
| Vocabulary (Based on The Hindu) | 12.00 PM |
| IBPS Clerk Prelims – English Language | 1.00 PM |
| SSC Practice Questions (Reasoning/Quantitative aptitude) | 2.00 PM |
| IBPS PO/Clerk – GK Questions | 3.00 PM |
| SSC Practice Questions (English/General Knowledge) | 4.00 PM |
| Daily Current Affairs Updates | 5.00 PM |
| IBPS PO Mains – Reasoning | 6.00 PM |
| IBPS PO Mains – Quantitative Aptitude | 7.00 PM |
| IBPS PO Mains – English Language | 8.00 PM |
This post was last modified on November 16, 2018 12:09 pm