Passage Completion : Exercise 1


In each of the following questions a short passage is given with one of the lines in the passage missing and represented by a blank. Select the best out of the five answer choices given, to make the passage complete and coherent.

1. There are many industries where India has an advantage because of relatively lower Costs of all forms of manpower-whether it is professional or factory labour. However, while this can give initial advantage, it should not be taken for an enduring advantage due to the following reasons. One, as products become more sophisticated, labour as cost factor becomes less and less important. Two, the differences in costs are narrowed down through higher level of automation. There, in processes that require large number of cheap labour,the industry is bound to shift its operation along. The line of the ever-declining scale of poorer countries. So a poorer country than India can eventually overtake us with yet cheaper labour. Therefore, when one has established an export market on the basis of cheaper manpower…………..

(a) One has to be vigilant to make sure that one builds up other advantages to compensate for the inevitable loss of this temporary advantage.
(b) One has to be vigilant to make sure that this advantage should not be given away
(c) One needs not be vigilant as there is no competition in near future
(d) There is need of caution to see the variations in labour charges of other countries
(e) There is need to build this cheap labour on regular basis

Ans.(a)
Passage is about the cheap labor and its advantage while competition from the other countires with even cheaper labor is there. Part before the blank space discusses the same thing like overtaking from these cheaper countries. Next part should have something(as sentence starts with ‘therefore’) that make India vigilant about the fact and option (a) is having that part additionally it contains the information how India should build on the advantage it had of cheap labor as discussed in major part of the passage hence this is best sentence to finish the passage. From the other options, (b) is second best and can bean option in absence of (a). Option (c) ,(d),(e) are not logical.

2. Standards and standardization, quality systems, certification and inspections, measurement systems,testing laboratories,their accreditation and calibration service, production and supply of standard reference materials etc, are all important building blocks. Quality control through the agency of the Export Inspection Agency leaves much to be desired. It is often alleged that EIA is actually playing a retrograde role,although inadvertently.………………..
(I) The list of items subject to compulsory export inspection needs be reviewed and shortened. A trimmer EIA list essential for a modicum of efficiency. (II) EIA should use international agencies to train people and update the equipment available for those limited items. (III) The quality development process need be professionalized by making use of quality development skills and managerial methods available around the world. Overall, per-export inspection needs to be greatly simplified, both in the interests of speedier clearance and less harassment for the exporters as well as better administration.

(a) EIA is to be scrapped and new council should be made with following improvements.
(b) This is happening in absence from a guiding international agency which can suggest a number of measures.
(c) This needs to be corrected.
(d) EIA is short of experience and therefore such a negative effect.
(e) Why was EIA formed in first place …?

Ans.(c)
Option (a) is wrong as scrapping of the EIA is not discussed in any part of passage. Rather improvement is discussed in subsequent part after the blank space. Option (b) and (e) are totally out of place as these do not go in with theme of passage. Only option which is brief and accurate for the blank space and connects two parts of passage is (c). As this is a general statement and can be inserted in with out affecting the sense in which passage is flowing. Option (d) is also not right for its negative approach.

3. The International Monetary Fund (IMF), the World Bank and the International Trade Organization were conceivedat the Breton woods Conference in July,1944 as institutions to strengthen international economic cooperation and to help create a more stable and prosperous global economy. While the IMF and the World Bank come into existence and started functioning from 1946, the International Trade Organization could not be set up. Instead, the General Agreement on Tariffs and Trade (GATT) was set up in 1947.Through successive round of negotiations, the GATT got transformed into what has come to be known as the World Trade Organization (WTO) that started functioning from January 1,1995. The various institutions have setup to govern international economic relations. While all the institutions work in close coordination with each other……………..

(a) Each of the institutions is independent
(b) Each of the these institutions works with different focus in different direction
(c) Each of these institutions has its own specific area of responsibilities
(d) Each of these institutions has major role to play in each other’s work
(e) Each of these institutions has imprint of its work on other’s performance

Ans.(c)
It has been already given that all the institutes work in coordination so option (d) and (e) is redundant and repeating same thing in different manner. Sentence indicates that though these institutions work in coordination these are having different responsibilities to shoulder. But again there are two options which are nearly saying same thing -option (b) and Option (c).But in option (b)’different direction’ is not right. If they are working in different direction then what is the need of coordinating. Option (a) is not correct for the context.

4. ADB finances principally specific projects in the region. It may make loans to or invest in the projects concerned. It may also guarantee loans granted to the projects. Most of the loans granted are hard loans or tired loans. However,loans form special funds set aside by the ADB up to 10 percent of its paid-up capital are granted under soft loan term for which purpose is has set up a separate window known as the Asian Development Fund (ADF). Soft loans are normally granted to projects of high development priority requiring longer periods of repayment with lower rates of interest. ADB normally finances foreign exchange cost of the project and the loan in repayable in the currency in which it is made. India has been eligible for assistance both under the ADB and its soft loan window, ADF………………However, it has been getting large assistance under the ADB.

(a) But India does not need any assistance from ADB.
(b) But India is not a member of ADB
(c) But India is not interested in ADB aids.
(d) But India has stayed away from the ADB
(e) But India is against ADB.

Ans.(d)
Statement after the blank space contradicts what is said in the option (a).So it is not right. Membership is not being discussed here so option (b) is also not right. Reason of option (a) goes with option (d) also. Option (e) is totally wrong. Only option which comes appropriate with the passage content and position of blank space is option (d).

5. In the planned economy of India, foreign capital has been assigned a significant role, although it has been changing over time. In the earlier phase of planning, foreign capital was looked upon as a means to supplement domestic investment. Many concession and incentives were given to foreign investors. Later on, however, the emphasis shifted to encouraging technological collaboration between India entrepreneurs and foreign entrepreneurs. In more recent times, efforts are on to invite free flow of foreign capital…………………..

(a) It would be instructive in this background to examine the Government’s policy towards foreign capital.
(b) It would be instructive in this background to examine the World Bank’s policy towards foreign capital in India
(c) Let us keep our fingers crossed and look for the next parliamentary session for debate on the issue
(d) Issue of Foreign capital is fragile and can be discussed only with relevant statistical figures in hand
(e) New changes are waiting in the line.

Ans.(a)
Option (e) is too general and can be avoided. Option b) is not right as Issue is related to the India not the world, so role of World Bank looks irrelevant in this context. Discussion in parliament is too far fetched in option (c). Option (a) rightly indicates that Indian Government’s policy for the matter discussed in passage would be instructive. Option(d) is out of context for its deviation from the topic.

6. FDI may actually be harmful to the recipient country if the economy is highly protected and foreign investment takes place behind high tariff walls. This type of investment is generally referred to as the tariff-jumping’ variety of foreign investment, whose primary objective is to take advantage of the protected markets in the host country.The longer the Government shields its home market with tariffs……………and more acute will be the conflict between him and the domestic entrepreneur. In view of this, an appropriate policy framework must respond to two conflicting objective: the need to liberalizes rules governing such investment in view of the growing integration of the world economy, and the need to ensure that such investment has positive effects on the country’s economy and does not lead to negative welfare effects.

(a) The more the foreign countries to apply pressure on India
(b) The more the foreign money to come in India
(c) The more the foreigner will come to exploit that protected market
(d) The more the foreigner to protest against that government
(e) The more the foreigner will raise the issue on international platform

Ans.(c)
Market is being discussed here not the countries. Option (e) is fit for the context but not for the place of the blank space where immediately before it shielding the markets is being described and immediately after conflict between the Indian and foreign entrepreneur is given. Conflict of countries is not given. So this open is too wide in its scope for the blank space and hence can not be appropriate. Other options are inappropriately distant from the context.

7. The Indian constitution provides for demarcation of functional responsibilities and finances between the Centre and the States. The provision of public services has been largely entrusted to the States. These mainly relate to law and order, public health, sanitation, water supply and agriculture. The States have to concurrently take certain functions in areas such as education, infrastructure. Their share in combined expenditure(Centre and States) on social services is about 85 per cent, while in the case of economic services; it is about 60 percent. Thus, the States have the primary responsibility to undertake tasks pertaining to developing social and economic infrastructure.However,their ability to undertake such development functions is critically determined by their financial position. The growing importance of state finances in the macro-economy is evident from the fact……………… The size of over all development expenditures of the states has always been higher than that of the Centre and the difference has got widened rather significantly in the 1990s.

(a) That the States has overrun their planned expenditures and lacking freedom of further development
(b) That the States has reached at the peak of their finances and overtaken Centres in revenues
(c) That Centre borrow money from the states for its expenditures on educational and social welfare programmes
(d) That the total expenditures of State governments have even undertaken those of the Centre
(e) That the total expenditures of State and Center has widened unprecedently in 1990s.

Ans.(d)
Passage is a comparison of Centre and State Government’s plans, finances and expenditures. In this particular portion of passage which have the blank part, it is mentioned that State finances are increasing at rapid rate and now they have more liberty for spending on expenditures mean while a comparison is also done with centre’s expenditures in part following the blank space so option (d) which encompasses this sense of part of passage is correct filler. Option(a) is opposite of what is being said in the passage. Option (b) and (c) discusses revenues and borrowing of centre’s which is not mentioned orintended in the passage so these are incorrect. Option(e) is repetition of what is given in statement after the blank space.

8. A budget is a statement containing a forecast of revenues and expenditures for a period of time, usually a year. It is a comprehensive plan of action designed to achieve the policy objectives set by the Government for the coming year. A budget is plan and a budget document is reflection or what Government expects to do in future. While any plan need not be a budget, a budget has to be necessarily a pan. It shows detailed allocation to resources and proposed taxation or other measures for their realization. A budget is,however, not a balanced sheet (exhibiting total assets and liabilities) of the Government on a particular date. Is a financial blueprint for action and is, therefore, of great advantage to Government departments, legislatures and citizens. The budget of government expresses its total activity in figures…………………………..

(a) A budget reflects what the Government is doing or intends to do.
(b) A budget is a legal document
(c) A budget is a promise of Government to its people
(d) A budget is a guideline for State Governments
(e) A budget is only a plan on papers that have never been achieved

Ans.(a)
Option(e) is doubtful as it seems to be judgment than a closing sentence. Legality of budget can not be ascertained through the passage.It is not a promise either. Only option(a) captures the theme of passage in single sentence. Hence it is the finishing sentence.

9. For a federal country like India, the budget of the Government of India is the most important instrument for implementing various economic and social objectives. The budgets of state government affect local activities. The Government of India budget influences the whole economy. The latter tries to bring about growth with social justice through its budget;it influences regional, functional and overall distribution of income and wealth through its expenditure (transfer) payments, investments and tax policies. The provisions of grants and loans to State governments and Union Territories and to the private sector and various subsidies (such as for export promotion, food grains distribution, etc.) are some of the elements of Central government budget policy for promoting growth and income distribution. …………………. Its significance lies in its ability to promote the various objectives of a modern state which has assumed the role of a welfare state and of a catalytic agent for promoting growth with social justice.

(a) A budget in modern times should, therefore not be judged sound or otherwise merely on the basis of its ‘deficit’ or ‘surplus’ or ‘balanced’ position
(b) A budget is therefore not only instrument of implementing the economic and social objectives but it is also about growth with social justice
(c) A budget is a reflection of success or failure of a government
(d) A budget in modern times should ,therefore not judged on its face value
(e) A budget in this turbulence time cannot be judged on basis of monetary indices of ‘surplus’ or ‘deficits’

Ans.(a)
Blank part should take some common perception of budget as the passage wants to indicate that the budget is not this…. but it is that…… and option(a) in best captures the essence of this logic.

10. After the East Asia crisis, the World Bank conducted a study on the underlying reasons for the crisis. It was found that at least a major part of the fundamental responsibility was on banks, which had understated their non performing accounts by as much as 47%. Since this was a study and not an investigation…………….. Nevertheless, the Basel committee on supervision did take cognizance, and issued circulars and directives not only on supervision, but also on Internal Functional Management. It will be remembered by those interested that Basel committee had also acted expeditiously after the Barring Bank’s failure, to separate treasury and lending operations from the decision making processes. Bank failures are nothing new in the world,although we in India have been insulated g from such traumas for more than two decades.

(a) The findings were not taken note of
(b) The findings were not taken seriously
(c) The findings were not legally binding on any one
(d) The fallout from this revelation was only taken note of
(e) The fallout from this revelation was seriously taken

Ans.(d)
As a study report is not a legal document it is not binding on anyone. Sentence represents study in a lighter vein so it must not be taken seriously but as the study is done there must be some purpose of it and results at least is taken note of. This logic brings to the option (d) which is correct part to complete the incomplete sentence of passage.

11. Whether the Government is right in bailing out a private sector bank is an issue that is decided more than by the long term social security policy of the Government ,than by economic reasons alone……………….. Nevertheless, in a situation of scarcity of resources, bailing out some body means the denial of resources to others. The irony of it is that in performing its duties of proper governance to the larger society through the process of bailing out,Government excuses the lack of corporate governance in banks.

(a) Economists world over learnt it hard way during the Great depression
(b) This is elementary principle of economics taught in schools
(c) Reasons are not limited to these two but extend to debts, liquidity & credit ratings issues
(d) It was unexpected and came like a bolt from the blue
(e) Particularly true for the Asian countries like India and China

Ans.(a)
Only option (a) seems to be logical for the context. As subsequent part of passage shows how it was a problem to bailout one and to deny other the same resources. Option (d) and (e) are out of place.

12. But no depreciation is allowed on Live Stock i.e. Horses. Although the horses are in the nature of fixed assets in the hands of the owner, no depreciation is allowed under Income Tax Act. Instead when the animal dies or becomes permanently useless the entire value of the horse can be written off as revenue loss in the year in which it dies or becomes permanently useless. When the gross income exceeds the total expenditure, it results in net profit which will be taxable at usual rates of tax applicable to the person.………………….. Although the live stock is in the nature of fixed assets of the owners buy them, maintain them, train them, and participate in races and Sell them or send them away to studs when they are useless.

(a) But when the gross income is less than the expenditure, then results in loss
(b) But when the gross income is higher than the expenditure, then results in loss
(c) But when the gross income is equal to expenditure then result is loss
(d) But when the gross income is there loss is the result
(e) But when the gross income is increasing then result is becoming evident

Ans.(a)
It is only logical option other options do not follow any logic. If income is less than expenditure is less than income than there is definitely a loss.

13. Aggregation of risks is some what quite new to banks in India. While some banks have started thinking in that line by trying to put integrated limits framework and integrated risk policies as well as using CBS solutions for technological integration, the effort required is beyond such requirement. Risk aggregation would mean aggregating the individual risk measures to decide most appropriate assets class that would contain the risk to the desired level dictated by the risk appetite .Capital allocation (about how much) would be based on such strategies………..

(a) Most banks are yet to conceptualize the same in their processes
(b) Most banks have already integrated it in their functioning; it is working over the years satisfactorily.
(c) Which would in long run prove to be the growth impeding
(d) Of risk aggregation which is really a new concept to Indian banks
(e) On expected lines of the regulation conditions laid down in the manual of the bank

Ans.(a)
As the passage says that risk aggregation is new at the beginning of passage it can be inferred that most banks are yet to conceptualize it in their processes.Hence option (a) is correct. Option (c) is farfetched conclusion. Option(d) is repetition of what is being stated in passage earlier. So it can not be the answer.

14. However, it is possible that the non -resident entity may have a business connection with the resident Indian entity. In such a case, the resident Indian entity could be treated as Permanent Establishment of the nonresident entity.…………… During the last decade or so, India has seen a steady growth of out sourcing of business processes by non residents or foreign companies to IT – enabled entities in India. Such entities are either branches or associated enterprises of the foreign enterprise or an independent India enterprise. The nonresident entity or foreign company will be liable to tax in India only if the IT -enabled BPO unit in India constitutes its Permanent Establishment.

(a) The tax treatment of the Permanent Establishment in such a case is under consideration
(b) How would the profit would be shared is not decided yet?
(c) A lengthy and cumber some process requiring a lot of application of mind and revenue principles is ahead for the tax department of India
(d) A new trend is seen in last decade.
(e) Indian companies have a lot on stake as competition increases.

Ans.(a)
Passage is about nonresident Indian entity and its tax deduction. Other options are not in the context of passage as they talk about the things which are not given or can be inferred from the passage.

15. The Finance Commission is entrusted with periodic review and resolution of Central- State fiscal problems. It was the clear intention of the father of the India Constitution that all matters pertaining to normal Central-State financial adjustment should be scrutinized by the Finance commission………………. An incidental and by no means insignificant advantage of the appointment of a Finance Commission has generally been to rekindle interest in issues pertaining to financial relations between the Centre and the States and to promote an enlightened national debate on the several facets of India’s federal fiscal set-up. The role of the Indian Finance Commission is unique in many ways. It is one of few commission provided in the constitution.

(a) which was given a pre-eminent role in the resolution of problems in fiscal federalism
(b) Which was constituted with the vision of a modern India with modern facilities
(c) Which was a dream of Father of Nation also
(d) Which was to be unique in its ways and a constitutional body
(e) Which was introduced as a backbone for Indian Economy

Ans.(a)
Before the blank space, centre -state problems are discussed and after the blank advantage of finance commission is given in this regard. So option (a) in right approach has shown finance commission in connection with both the problems and it’s own advantage. Option (c) is out of context. Option (d) is also mentioned in passage in later parts. Option (e) can be true but not the best answer.

16. The art of medicine is the art of healing, not just treating, and not even just curing. Yet it is only when the art and science join hands that healing is best accomplished. The author then adds ……………., remember that the practice of medicine is an art, not a trade, a calling, not a business, a calling in which your heart will be exercised equally with your head. This book is rare work of the art of medicine,from a very rare practitioner of the science of medicine.

(a) “mankind depends on science as equally on the art”
(b) “for the mercy’s sake let us have little less science and a little more art”
(c) “let us consider science at par with art”
(d) “let us forget what is art and what is science”
(e) “do not blame medicine for it”

Ans.(b)
Option (b)is right as it has connection with what is said in the passage after the blank space. Mercy in this option connects well with not a trade, not a business etc.

17. The thirteen Finance commissions cover a span of more than 60 years during which many conditions have changed. Correspondingly, the approach of the later commissions may be expected to be different in several respects from the earlier ones Nevertheless, it is possible to discern certain common elements in the thinking of the successive Finance Commissions. Which have come to evolve gradually what may be called’ the Indian Finance Commission’s approach to federal finance…….. According to this approach, States’ share of Central taxes is not allocated strictly on the basis of need. These problems and short comings come later in light but have caused what was not accounted at that time.

(a) And it happened to be in that way
(b) There are several inadequacies in the approach of the Finance Commissions
(c) Evolution is a long process and it is a same story for commissions
(d) But they differ completely from them and each time new approach was looked for
(e) This was based on the tax sharing basis principle of commissions

Ans.(b)
Last part of passage is about short comings given in mentioned through the statement of option (b). New approach in option (d) can fit but leaves the passage stranded and two parts before the blank and after the blank can not be joined through this option.

18. The Parihar is, for all practical purposes, a functional, fully fitted out submarine. After this brief ceremony,the submarine is to be towed out for the first time across the naval dockyard and moored in an enclosed pier called Site Bravo…………..Over the next few months, it will commence a series of harbor trials .the primary system, a nuclear reactor,generates the heat which drives the secondary system, a steam turbine which spins the submarine’s propeller, are to be tested separately. First, the steam turbine is to be jump started with shore based supply. The next significant step will be starting up the submarine’s nuclear reactor where Zirconium rods in the core of the submarine’s pressurized water reactor will be slowly raised.

(a) It is the advent of new technology in India
(b) It has entered in chain reaction chamber
(c) It is like coming out from maternity ward to nursery
(d) It is unprecedented step to start such a sequence of processes
(e) It is very critical for a nuclear submarine

Ans.(c)
The submarine is newly developed and introduced in ceremony is now going for trails. It is like coming out from maternity ward to nursery.

19. For all those women who perpetually complained about how all cars are designed for men, company is out with a car especially suited for them. The Your Concept Car…………is a dream come true. It has a key less entry,additional storage space, a lower hood and the back seat screen going all the way till the rear end so that you know exactly where the car ends. Add to this a parking aid for parallel parking and their most advanced technology, Ergo vision that scans the body at the dealership, stores the data and every time you hop into the car, automatically adjusts the height of the seat, the steering wheel, the distance between them and everything else to your specifications. Even though it is a concept car that will not hit the roads, its women friendly features have been incorporated in some of the other cars.

(a) The first to be designed by experts
(b) The first to be launched by company
(c) The first to be the concept car
(d) The first to be designed by all women team
(e) The first to with so many features

Ans.(d)
As this car is specially designed for the women it can be said that car is designed by all women team. This is best option which emphasizes the point of passage.

20. The growing importance of Union excise amongst the shared taxes and the ascendancy of population as the principal basis of distribution are the two salient features of tax-sharing determined by the Finance Commissions. The finance Commission is called upon to determine the State that would be in need of grant-assistance of the quinqennium under reference and the amount of such assistance in each case. The first Finance Commission laid down some important principles governing the determination of grants-in-aid for States. …………………

(a) These principles have been generally,endorsed by all the subsequent Commissions.
(b) These principles have been discarded by subsequent commissions
(c) These principles were taken from the Finance commissions of the other countries
(d) These principles were derivations from the elementary formulas of text books
(e) These principles can not be changed and are fixed

Ans.(c)
First finance commission laid down some of the principles which were followed by subsequent commissions is a positive statement which is thet one of passage. Passage presents the finance commission in positive light. Option (e) and (d) are doubtful and can not be reached from the passage.

21. The biggest attraction of the public sector is that, for women with the same qualifications and skills it almost always pays better than does private industry.For men the differences are much less pronounced ………………….. Figures are hard to come by,but in rich countries women typically hold 30-40% of senior managerial posts in central government. Hours and conditions too are usually more congenital and maternity arrangements more generous . So with better pay, conditions and promotion prospects, it is no wonder that the public sector is the employer of the choice for so many women.

(a) The public sector is also more likely to promote women to senior jobs
(b) The public sector provide safe working environment for the women.
(c) Women are paid more than men in public sector
(d) Public sector is better pay master than private banks for women
(e) There is no issue in making a choice for women

Ans.(a)
In this part of passage a comparison of women with men in public or private sector is given with balance tilting to side of women. When preference is given to women in a particular sector then promotion to senior position is also imminent. Hence this option is best one to choose.

22. The fiscal position of the Indian Governments – both Centre and States -has been under stress since the mid -1980s. The stress stems from the inadequacy of receipts in meeting the growing expenditure requirements. Reflecting the fiscal stress, the expenditure for development activities, which are directly related to growth, has suffered. On other hand expenditure on non developmental purposes, largely committed, has witnessed a steady rise. …… in favor of developmental expenditure in order to enable higher growth.That the state of finances of States is in disarray is beyond dispute. The state finances have not been properly managed not only by the states but also by the planning commission and the central Government, which include economists who do not see states as autonomous responsible organizations.

(a) The crucial issue, therefore, is to bring about improvement in the finances with a view to restructuring expenditure
(b) The crucial issue ,therefore ,is to analyze the finances with a view to see what can be done to expenditure
(c) Hence ,it can be said that management of finances is important vis-à-vis management of expenditures
(d) Therefore ,Governments have to mend their way and balance the finances and the expenditures
(e) What is expected in this scenario is a policy shift

Ans.(a)
Passage portion is not about the management of finances but the improvement in finances and restructuring of expenditures. Mending the ways of government is a too strong statement and does not apply here.

23. Under taxation is at the roots of the Indian fiscal problems. The available evidence shows that the tax -GDP ratio in India is lower than the level it should have for its per capita GDP by at least 2.5 percent. It is, therefore important to focus reform efforts to increase the tax ratio. Of course, this does not mean that strategy to increase the tax ratio lies in increasing the tax rates. The strategy is to reiterate that tax administration is tax policy. All exemptions will not go. Politically, it is not possible. The world over, there was a time when we thought that equity in tax policy meant reducing the incomes of the rich. But today’s tax philosophy is that equity in tax policy is increasing the incomes of the poor. The incomes of the poor can not be increased by reducing those of the rich ……….

(a) As they are the central point of any economy their importance is preemptory
(b) As they have the real remote control in their hands and poor can not see that.
(c) As they have the capital for investment and give employment to the poor.
(d) As they have lobbying power to decide the fate of the poor.
(e) As they are capital rich and can not be compared with poor.

Ans.(c)
Only option (c) is logical and sensible as rich can not be centre point of any economy. They do not have the remote control either. Option (e) is just general statement and not in sync with passage. Fate of poor in hands of rich seems irrational.

24. ………… Enterprises world wide are therefore, now putting in place an integrated framework for risk management, which is proactive, systematic and covers the entire organization. Banks in India are also moving from the individual silosystem to an enterprise -wide risk management system. This is placing greater demands on the risk management skills in banks and has brought to the fore the need for capacity building. While the first mile-stone would be risk integration across the entity, banks would do well to aggregate risk across the group both in the specific risk areas as also across the risks.

(a) Banks are most risk prone of all the financial institutions.
(b) Banks were managing each risk independently ,in isolation, which is no longer inadequate
(c) It is about risk level at which an enterprise is operating to have or not have risk management system
(d) Risk management in India is lagging for banks in comparison with other parts of world
(e) What, if risk becomes unmanageable and looks right in your face..?

Ans.(b)
Certain words in other options make them doubtful -‘most’ in option(a); ‘Risk level’in option (c).Comparison with other parts of world is not intended here as given in option (d).

25. One of the most stubborn fallacies about inflation is the assumption that it is caused, not by an increase in the quantity of money, but by a “shortage of goods.”It is true that a rise in prices (which, as we have seen, should not be identified with inflation) can be caused either by an increase in the quantity of money or by a shortage of goods-or partly by both. Wheat, for example, may rise in price either because there is an increase in the supply of money or a failure of the wheat crop. But we seldom find, even in conditions of total war, a general rise of prices caused by a general shortage of goods. ………….” that even in the Germany of 1923, after prices had soared hundreds of billions of times, high officials and millions of Germans were blaming the whole thing on a general “shortage of goods”-at the very moment when foreigners were coming in and buying German goods with gold or their own currencies at prices lower than those of equivalent goods at home.

(a) Yet so stubborn is the fallacy that inflation is caused by a “shortage of goods
(b) Yet people believe on such fallacy to unimagined level
(c) Yet so wide is acceptance
(d) Yet so timely and abrupt is response to fallacy
(e) Yet more and more people started to believe on ‘shortage of goods’ fallacy

Ans.(a)
All options can fit. But the best one is (a) because It emphasizes the point said initially in the passage with word ‘stubborn’.
It relates with German issue coherently.
It has detail definition of fallacy which is a requirement when one thing is being discussed again after a long gap in passage.