<div><span style='font-size: 18pt;'><strong>Mini Mock CAT</strong></span></div> <div>(Brought to you by NDIM, Delhi)</div>

(Brought to you by NDIM, Delhi)

3 Sections:

VARC - 8 Questions (15 minutes)

DILR - 5 Questions (15 minutes)

QA - 7 Questions (15 Minutes)

[+3 for every correct answer and -1 for every incorrect]

All questions are MCQ

Read the passage to answer question 1 to 4:

The depreciation of an economy’s currency is not a matter of concern in itself. The

decline in value against major currencies has to be viewed within a set of macroeconomic

factors. The recent depreciation of the Indian rupee is a case in point. The rupee has

been depreciating for a long time. What are of concern now are the rate at which

the depreciation is occurring and the underlying factors causing the change. The

Russia-Ukraine war has disrupted supply chains causing commodity prices to rise, leading

to a worldwide hardening of inflationary trends. This, in turn, has caused major central

banks to raise interest rates, forcing investors back to the safe haven of the US dollar. For

India, these headwinds from the global economy have caused several problems. The rise

in international prices, especially of crude oil, has led to a higher import bill and, hence,

a greater demand for dollars. Higher interest rates in developed country markets have

caused a significant outflow of portfolio investments from India, aggravating the already

climbing demand for dollars from a rising import bill. By May 2022, foreign institutional

investors had pulled out Rs. 1.50 lakh crore from Indian markets.

In the face of these pressures, the rupee, left to itself, would decline in value as the

rupee-price of a dollar would increase substantially. One way the Reserve Bank of

India could stem the tide would be to sell off dollars in the market to ease the supply

situation. However, this would mean that while the value of the rupee could be contained,

the nation’s foreign exchange kitty would start to erode further. The RBI has been

doing exactly that. The challenge before the RBI is this: how much to let the rupee

depreciate and how much to intervene to prop it up? Too much depreciation would raise

domestic inflation rates as the rupee-price of imports, especially oil, would raise costs

of production. It could trigger a rise in policy-controlled interest rates while closely

monitoring inflationary expectations. The biggest challenge is to navigate unpredictable

international economic shocks in the near future. The Indian economy’s health is not

exactly at its best. Exports may not be able to take advantage of a falling rupee since

international demand is expected to stagnate. India’s growth and employment situations

are yet to stabilise to what they were about a decade ago. The RBI has difficult choices:

controlling inflation versus stimulating growth and stabilising the rupee without

severely diminishing the economy’s foreign exchange kitty.

[Extracted, with edits and revisions, from “Stiff test: Editorial on depreciation of rupee

& challenges before RBI”, The Telegraph]

Q1. Which of the following is the author most likely to agree with?

It is a major cause for concern if an economy’s currency is depreciating.

Currency depreciation is not a reason for worry in itself, but if macroeconomic factors are not good, there may be a cause for concern.

The fact that the Indian rupee is witnessing a decline in value against major currencies is very worrisome.

A central bank must always do everything in its power to stem the slightest depreciation of an economy’s currency.

Q2. Based on the author’s arguments, which of the following, if true, would reduce the decline in value of the rupee?

Appointing a new Governor for the RBI who has a better sense of how to control inflationary trends.

A steep increase in commodity prices and the continued disruption of supply chains.

A reduction in worldwide inflationary trends and the reduction of interest rates in developed country markets.

The RBI buying as many dollars as possible from the market.

Q3. Which of the following, if true, would most weaken the author’s arguments?

The Indian economy has been affected by global inflationary trends and the increase of interest rates in developed country markets.

Since developed country markets have increased their interest rates, global investors have pulled their investments out of other economies, and routed them to such developed country markets.

As the demand for US dollars increases, it is likely the rupee-price of a dollar would increase substantially.

The Indian economy and currency are highly protected and have been insulated from the effects of global inflationary trends and the increase of interest rates in developed country markets.

Q4. Which of the following, if true, would most strengthen the author’s arguments for why Indian exports may not be able to take advantage of a falling rupee?

Economies across the world are witnessing a slowdown, and in such economies, demand for imports decreases substantially.

Economies across the world are booming, and there is an increasing demand for Indian exports.

A reduction in the volume of exports would be more than offset by the increased value of dollars that Indian exporters would earn.

Countries across the world have managed to find ways to insulate themselves from the effects of the Russia-Ukraine war and will need a lot of Indian imports to sustain their new growth models.

Q5.

Thoughts are essential to communication and only humans have the ability to think about objects not present in their surroundings.

The ability to think about objects not present in our environment precedes the development of human communication.

Displaced reference is particular to humans and thoughts pop into our heads for no real reason.

Thoughts precede all speech acts and these thoughts pop up in our heads even in the absence of any stimulus.

Q6.

Genetic theory has a wide range of theoretical approaches and applications and Metabolic theory must have the same in the field of ecology.

Genetic theory has evolved to spawn a wide range of theoretical models and applications but Metabolic theory need not evolve in a similar manner in the field of ecology.

Genetic theory has a wide range of theoretical approaches and application and is foundational to evolutionary biology and Metabolic theory has the potential to do the same for ecology.

Genetic theory provides an example of how a range of theoretical approaches and applications can make a theory successful.