Read the passage given below and answer questions from 1 to 4 on your understanding of the passage:
The more difficult task of ensuring global economic stability was assigned to the IMF. Those who convened Bretton Woods had the global depression of the 1930's very much on their minds. Almost three quarters of a century ago, capitalism faced the most severe crisis to date. The Great Depression enveloped the whole world and led to unprecedented increases in unemployment. At the worst point, a quarter of America's workforce was unemployed. The British economist John Maynard Keynes, who would later be a key participant at Bretton Woods, put forward a simple explanation, and a corresponding simple set of prescriptions; lack of sufficient aggregate demand explained economic downturns; government policies could help stimulate aggregate demand. In cases where monetary policy is ineffective, governments could rely on fiscal policies, either by increasing expenditures or cutting taxes. While the models underlying Keynes' analysis have subsequently been criticised and refined, bringing a deeper understanding of why market forces do not work quickly to adjust the economy to full employment, the basic lessons remain valid.
1. The IMF was assigned:
(A) The task of accelerating economic growth of the world
(B) The task of controlling inflation in the world economy
(C) The task of ensuring economic stability in the world economy
(D) The task of removing imbalances from the U.S.A.
2. During the Great Depression :
(A) Unemployment rate in the World was 25%
(B) Unemployment rate in England was 20%
(C) Unemployment rate in the U.S.A. was 25%
(D) Unemployment rate in India was 20%
3. According to Keynes, the cause for the unprecedented global depression of the 1930's
was:
(A) High interest rate in the USA.
(B) Low interest rate in the UK.
(C) Break down of the gold standard
(D) Lack of sufficient aggregate demand
4. Keynes' prescription to fight global depression was that:
(A) The government should pursue active monetary policy
(B) The government should pursue a combination of fiscal policy and monetary policy
(C) The government should pursue fiscal policy where monetary policy is in effective
(D) The government should have a policy of balanced budget
answers: 1.C, 2. C, 3. D, 4. C
The more difficult task of ensuring global economic stability was assigned to the IMF. Those who convened Bretton Woods had the global depression of the 1930's very much on their minds. Almost three quarters of a century ago, capitalism faced the most severe crisis to date. The Great Depression enveloped the whole world and led to unprecedented increases in unemployment. At the worst point, a quarter of America's workforce was unemployed. The British economist John Maynard Keynes, who would later be a key participant at Bretton Woods, put forward a simple explanation, and a corresponding simple set of prescriptions; lack of sufficient aggregate demand explained economic downturns; government policies could help stimulate aggregate demand. In cases where monetary policy is ineffective, governments could rely on fiscal policies, either by increasing expenditures or cutting taxes. While the models underlying Keynes' analysis have subsequently been criticised and refined, bringing a deeper understanding of why market forces do not work quickly to adjust the economy to full employment, the basic lessons remain valid.
1. The IMF was assigned:
(A) The task of accelerating economic growth of the world
(B) The task of controlling inflation in the world economy
(C) The task of ensuring economic stability in the world economy
(D) The task of removing imbalances from the U.S.A.
2. During the Great Depression :
(A) Unemployment rate in the World was 25%
(B) Unemployment rate in England was 20%
(C) Unemployment rate in the U.S.A. was 25%
(D) Unemployment rate in India was 20%
3. According to Keynes, the cause for the unprecedented global depression of the 1930's
was:
(A) High interest rate in the USA.
(B) Low interest rate in the UK.
(C) Break down of the gold standard
(D) Lack of sufficient aggregate demand
4. Keynes' prescription to fight global depression was that:
(A) The government should pursue active monetary policy
(B) The government should pursue a combination of fiscal policy and monetary policy
(C) The government should pursue fiscal policy where monetary policy is in effective
(D) The government should have a policy of balanced budget
answers: 1.C, 2. C, 3. D, 4. C
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