Reading Comprehension is an important part of the English Language section in bank exams. Reading Comprehension Quiz 7 includes one passage and 20 questions to help you build confidence and improve your question-solving accuracy.
Reading Comprehension Quiz 07 Passage
Modern central banks increasingly adopt flexible inflation targeting frameworks to maintain price stability while remaining responsive to growth objectives. By setting an explicit inflation target, central banks aim to anchor public expectations, making price behavior more predictable for investors, consumers, and wage-negotiating labor unions. When inflation pressures rise due to supply-chain disruptions or excessive demand, central banks tighten monetary conditions by raising policy rates. However, aggressive rate hikes can stifle business investment and slow down job creation. Conversely, lowering interest rates during an economic slowdown risks reigniting inflationary pressures if structural bottlenecks persist. Consequently, central bankers must continuously weigh the immediate costs of price stabilization against long-term macroeconomic stability.
FREE Reading Comprehension Quiz 07
Read the given passage thoroughly and attempt the 20 questions based on it. Carefully analyse the information, context, vocabulary, and inferences before choosing your answers.
1. What is the main objective of setting an explicit inflation target?
2. How do central banks typically respond when inflation pressures increase?
3. What potential drawback is associated with aggressive interest rate hikes?
4. What risk arises from lowering interest rates during an economic slowdown?
5. What is the central idea of the passage?
6. Choose the synonym of ‘anchor’.
7. Choose the antonym of ‘stifle’.
8. The phrase ‘structural bottlenecks’ refers to:
9. The tone of the passage is best described as:
10. Which group’s price expectations are explicitly mentioned as being anchored by inflation targeting?
Quiz Summary
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11. Why do modern central banks adopt a “flexible” framework rather than a rigid one?
12. According to the text, which two factors are cited as causes of rising inflation pressures?
13. How does clear inflation targeting assist labor unions during wage negotiations?
14. What trade-off must central bankers continuously manage?
15. Under what economic condition might a central bank consider lowering policy rates?
16. Choose the word most similar in meaning to ‘persist’ as used in the passage.
17. Choose the word most opposite in meaning to ‘predictable’ as used in the passage.
18. What risk is specifically linked to rising inflation when supply chains are disrupted?
19. What effect does setting an explicit inflation target have on consumer and investor confidence?
20. What is the ultimate takeaway regarding central bank policy execution?
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