e s

s s
l a
e C
il n
O n
VA – 13
Eclectic Reading - 2
 e s
s
Vocabulary of Business and Economy

l as
1. Net income in its most basic definition refers to a company‟s total earnings, or profit.
Simply put, NI is the difference calculated when subtracting expenses from revenue.

C
2. Earnings per share serve as an indicator of a company‟s profitability. It is the
portion of a company‟s profit allocated to each outstanding share of common stock.

e
il n
3. The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that
measures its current share price relative to its per-share earnings.

n
4. Valuation: The process of determining the current worth of an asset or company.
There are many techniques that can be used to determine value, some are

O
subjective and others are objective.
5. Market value is commonly used to refer to the market capitalization of a publicly-
traded company, and is obtained by multiplying the number of its outstanding shares
by the current share price. Market value is easiest to determine for exchange-traded
instruments such as stocks.
6. Profit and Loss Statement (P&L): A financial statement that summarizes the
revenues, costs and expenses incurred during a specified period of time, usually a
fiscal quarter or year.
(Contd…)
 e s
s s
7. Current liabilities: A company‟s debts or obligations which are due within one year.

a
Current liabilities appear on the company‟s balance sheet and include short term
debt, accounts payable, accrued liabilities and other debts.

C l
8. Current assets: A balance sheet account that represents the value of all assets that

e
can reasonably expected to be converted into cash within one year. Current assets
include cash and cash equivalents, accounts receivable, inventory, marketable

il n
securities, prepaid expenses and other liquid assets that can be readily converted to
cash.

O n
9. Liquidity describes the degree to which an asset or security can be quickly bought
or sold in the market without affecting the asset‟s price.
10. Market liquidity refers to the extent to which a market, such as a country‟s stock
market or a city‟s real estate market, allows assets to be bought and sold at stable
prices. Cash is the most liquid asset, while real estate, fine art and collectibles are all
relatively illiquid.
11. Solvency: The ability of a company to meet its long-term financial obligations.
Solvency is essential to staying in business, but a company also needs liquidity to
thrive. Liquidity is a company‟s ability to meet its short-term obligations. A company
that is insolvent must enter bankruptcy; a company that lacks liquidity can also be
forced to enter bankruptcy even if it is solvent. (Contd…)
 e s
s s
12. Dividends are payments from a corporation or public company made to its

a
shareholders from its earnings or profits. Dividends are not always paid in the form

offered.

C l
of cash; other forms of remuneration such as properties, shares, or credits can be

13. Audit - a physical check performed by an auditor or tax official on a business‟

e
financial records to check that everything is accounted for correctly.

il n
14. Benchmarking - the process of comparing your business to similar businesses in
your industry.

expenses.

O n
15. Break-even point - the exact point when a business‟ income equals a business‟

16. Capital - wealth in the form of money or property owned by a business.

17. Compliance - procedures that are undertaken at regular intervals or on an ongoing
basis to ensure that the regulations and/or laws laid down by an authoritative body
are kept.
18. Consultant - an individual, partnership or corporation engaged to provide
professional independent and expert advice or services.
19. Demographics - the characteristics of a segment of the population e.g. customers.
(Contd…)
 e s
s s
20. Depreciation - the process of expensing an asset over a period of time. An asset

a
is depreciated to spread the cost of the asset over its useful life.

C
transaction in two accounts, both as a debit and a credit. l
21. Double-entry bookkeeping - is a bookkeeping method that records each

e
22. Entrepreneur: Generally, this term is used to describe a person who starts and

il n
grows a unique or innovative business operation.

23. Equity finance - is money provided to a business in exchange for part ownership

O n
of the business. This can be money invested by the business owners, friends,
family, or investors like business angels and venture capitalists.

24. Franchise agreement - a legal contract setting out the operational terms and
conditions of a franchise business. This usually covers franchisor and franchisee
responsibilities, lease agreements, intellectual property, marketing and payments.
25. Interest rate - a percentage used to calculate the cost of borrowing money or the
amount you will earn. Rates vary from product to product and generally the higher
the risk of the loan, the higher the interest rate. Rates may be fixed or variable.

26. Inventory - an itemized list of goods or materials a business is holding on hand.

Also called stock. (Contd…)
 e s
s s
27. Initial public offering (IPO) - when a company first offers shares on the stock

a
market to sell them to the general public. Also known as floating on the stock market.

C
marketing, utilities and administrative costs. l
28. Overheads - the fixed costs associated with operating a business such as rent,

e
29. ROI: Stands for „return on investment‟. It‟s a way of thinking about the benefit
(return) of the money you‟ve invested into the business. To calculate ROI, divide the

il n
gain (net profit) of the investment by the cost of the investment - the ROI is
expressed as a percentage or a ratio.

n
30. SME (Small to Medium Enterprise) - The term SME is used to refer to micro-

O
businesses, small businesses and medium sized firms.
31. Unique selling position - a characteristic of a business or a product/service that
sets it apart from the competition.
32. Venture Capital - capital invested in a start-up business that is thought to have
excellent growth prospects but does not have access to capital markets because it is
a private company.
33. Vision statement - an inspiring statement that expresses an organization‟s main
ambitions or goals.
34. Working capital - the cash available to a business for day-to-day expenses.
 e s
s s
Directions for questions 1 to 20: Read the following passages carefully and answer

a
the questions that follow.
Passage – I

C l
Is it time for Vodafone, the world‟s biggest mobile operator, to overhaul its strategy? The

e
idea is not new, but it has recently become the subject of much debate. Sir John Bond,
a banker who will take over as Vodafone‟s chairman in July, has been doing the rounds

il n
of institutional shareholders, many of whom have expressed disquiet about the giant
firm‟s direction.

n
Some investors have called for Vodafone to sell its 45% stake in Verizon Wireless, a big

O
American mobile operator, which is worth around £25 billion ($45 billion); there are also
concerns about continuing problems at the firm‟s Japanese unit. Vodafone has
continued to pursue its unique approach of being a mobile-only operator with unrivalled
global scale. But both pillars of this once-visionary strategy are now being called into
question.
“Vodafone has consistently overpromised and under delivered on its „bigger is better‟
strategy,” complains John Karidis, an analyst at Man Securities. Vodafone has long
insisted that its size provides huge economies of scale when buying handsets, network
equipment and software. But while nearly all of Vodafone‟s regional operations use the
same technology, called GSM, there are two big exceptions: its American and Japanese
units. (Contd…)
For questions 1 to 4
 e s
s s
Verizon Wireless uses a different, incompatible wireless technology called CDMA, so
there is little scope for economies of scale. Vodafone‟s attempt to use the same

a
handsets worldwide was a spectacular failure in Japan, a unique market that is two or

C l
three years ahead of Europe in its adoption of mobile technology. Only when Vodafone
relented and launched a new range of Japan-specific handsets was it able to halt an
exodus of subscribers. In the process, it undermined its own argument about economies

e
of scale. And with three new operators due to launch services later this year, the
Japanese market is about to become far more competitive.

il n
As a result, it could make sense for Vodafone to scale back its global ambitions. “The
market has lost confidence in the group‟s ability to deliver value by pursuing their current

O n
global strategy,” David Cumming, head of UK equities at Standard Life, a big institutional
investor in Vodafone, said this week. Mr Karidis says he would like to see a reversal of
the expansionist strategy and more focus on execution. The company‟s latest trading
update, released this week, was a mixed bag, with higher-than-expected subscriber
growth, but declines in average revenue per user, a widely used industry measure, in
Britain, Germany, Italy and Japan. The stronger performance of O2 says Mr Karidis,
shows that scale is less important than “razor-sharp operating focus”.
The second pillar of Vodafone‟s strategy, its mobile-only approach, also looks wobbly.
Around the world, telecoms operators are starting to integrate their fixed and mobile
networks, offering special deals to customers who buy both services together. Beyond
that, many operators are also gearing up to offer “quadruple play” bundles of fixed and
mobile telephony, broadband and television services. If such “converged” bundles prove
popular, Vodafone‟s mobile-only strategy will leave it isolated. (Contd…)
For questions 1 to 4
 e s
s s
Needless to say, Arun Sarin, Vodafone‟s chief executive, disagrees with the critics.
“There is an advantage to scale,” he insists, “and we are happy with occupying the

l a
mobility space.” But he is also, he admits, prepared to be “flexible and pragmatic” about
Vodafone‟s strategy. Indeed, there are some signs of an impending shift.

e C
Mr Sarin notes that both the American and Japanese units are worth more today than
they were a year ago. Vodafone‟s board regularly reviews whether to keep them in the
company‟s portfolio, and has so far decided to do so—though that could change in

il n
future. “What we have to do is keep these assets in the fold until there is clear visibility of
value that we can take home to our shareholders”, he says. In other words, he just

n
seems to be waiting for the right time to sell.
He disagrees that Vodafone has concentrated on expansion at the expense of

O
execution. O2 has been run with more of a short-term strategy, to attract a buyer, he
says. And Vodafone‟s operations in Romania and the Czech Republic were swiftly
integrated into the group and are now performing better than expected. But Mr Sarin has
signaled the end of his buying spree; he would like to increase Vodafone‟s stake in
Polkomtel, a Polish operator, he says, but does not have anything else on his shopping
list at the moment.
What of the suggestion that Vodafone‟s mobile-only strategy will be undermined by
convergence? “It‟s very early days,” says Mr Sarin. “We are dubious whether customers
really want all the things that people are imagining that they want.” Already, he notes,
Vodafone sometimes provides fixed/mobile bundles to big corporate customers, by
buying capacity from fixed-line operators. (Contd…)
For questions 1 to 4
 e s
s s
The company is also acting as a wireless partner to BT, Britain‟s fixed-line incumbent,
which lacks a mobile network, and may strike similar deals in Italy and Japan. America‟s

l a
Verizon, which owns the other 55% of Verizon Wireless, plans to offer converged
services too.

e C
il n
O n

For questions 1 to 4
 e s
s s
How does the instance of the Japanese market question Vodafone‟s argument for

a
“economies of scale”?

the market was limited to one country.

C l
(1) It had to create a special range of phones which did not save costs considering

e
(2) It had to create a special range of phones for which it had to buy R & D from

il n
universities at a huge cost.

(3) It lost a lot of time trying to evolve these special handsets and by then the

O n
competition had already captured the market.
(4) It had to lose its lead in the Asian market as a result of concentrating all efforts on
creating a special handset for Japan.
(5) It was able to half an exodus of subscribers due to Japan‟s unique market.

Question – 1
 e s
s s
What is the biggest problem that the author foresees with Vodafone‟s “mobile only”

a
strategy?

C l
(1) It is flawed because in many parts of the world the mobile is becoming redundant.
(2) Mobile companies are bundling their offerings and this is the way of the future.

e
il n
(3) The world is shrinking and people are choosing to use the Internet more than the
cellphone.

n
(4) Developing markets are not so open to a “mobile only” company.

O
(5) Broad band services are preferred over mobiles.

Question – 2
 e s
s s
It can be inferred that the author thinks Sarin‟s comment about waiting, in case of the

a
American and Japanese markets‟ value to rise, is
(1) a long term strategy that might make a profit for Vodafone.

C
(2) a long term strategy that is not based on adequate research.
l
e
il n
(3) based on prejudices against these markets and this might be a problem.
(4) not a long term strategy.

n
(5) a strategy based on intuition rather than business logic.

Question – 3
 e s
When it comes to the idea of convergence, Vodafone believes

s s
a
(1) the idea is ahead of its time and will be a reality in the next decade.

l
C
(2) it is not clear whether customers prefer it or not.

e
(3) it is unclear whether companies can benefit from it.

il n
(4) it is a matter of time before companies around the world adopt it.
(5) it is already providing the service in different ways.

O n

Question – 4
 e s
s
Passage – II

s
Recently I spent several hours sitting under a tree in my garden with the social

a
anthropologist William Ury, a Harvard University professor who specializes in the art of

l
negotiation and wrote the bestselling book,Getting to Yes. He captivated me with his

C
theory that tribalism protects people from their fear of rapid change. He explained that
the pillars of tribalism that humans rely on for security would always counter any

e
significant cultural or social change. In this way, he said, change is never allowed to

il n
happen too fast. Technology, for example, is a pillar of society. Ury believes that every
time technology moves in a new or radical direction, another pillar such as religion or
nationalism will grow stronger - in effect, the traditional and familiar will assume greater

n
importance to compensate for the new and untested. In this manner, human tribes

O
avoid rapid change that leaves people insecure and frightened.
But we have all heard that nothing is as permanent as change. Nothing is guaranteed.
Pithy expressions, to be sure, but no more than cliches. As Ury says, people don‟t live
that way from day-to-day. On the contrary, they actively seek certainty and stability.
They want to know they will be safe. Even so, we scare ourselves constantly with the
idea of change. An IBM CEO once said: „We only re-structure for a good reason, and if
we haven‟t re-structured in a while, that‟s a good reason.‟ We are scared that
competitors, technology and the consumer will put us out of business so we have to
change all the time just to stay alive. But if we asked our fathers and grandfathers,
would they have said that they lived in a period of little change? Structure may not have
changed much. It may just be the speed with which we do things. (Contd…)
For questions 5 to 7
 e s
s s
Change is over-rated anyway. Consider the automobile. It‟s an especially valuable

a
example, because the auto industry has spent tens of billions or dollars on research

C l
and product development in the last 100 years. Henry Ford‟s first car had a metal
chassis with an internal combustion, gasoline-powered engine, four wheels with rubber
tyres, a foot operated clutch assembly and brake system, a steering wheel, and four

e
seats, and it could safely do 18 miles per hour. A hundred years and tens of thousands

il n
of research hours later, we drive cars with a metal chassis with an internal combustion,
gasoline-powered engine, four wheels with rubber tyres, a foot operated clutch
assembly and brake system, a steering wheel, four seats - and the average speed in

O n
London in 2001 was 17.5 miles per hour!
That‟s not a hell of a lot of return for the money. Ford evidently doesn‟t have much to
teach us about change. The fact that they‟re still manufacturing cars is not proof that
Ford Motor Co. is a sound organization, just proof that it takes very large companies to
make cars in great quantities - making for an almost impregnable entry barrier.
Fifty years after the development of the jet engine, planes are also little changed.
They‟ve grown bigger, wider and can carry more people. But those are incremental,
largely cosmetic changes.

(Contd…)

For questions 5 to 7
 e s
s s
Taken together, this lack of real change has come to mean that in travel - whether
driving or flying — time and technology have not combined to make things much

l a
better. The safety and design have of course accompanied the times and the new

C
volume of cars and flights, but nothing of any significance has changed in the basic
assumptions of the final product.

e
At the same time, moving around in cars or aeroplanes becomes less and less efficient

il n
all the time. Not only has there been no great change, but also both forms or transport
have deteriorated as more people clamour to use them. The same is true for

n
telephones, which took over hundred years to become mobile, or photographic film,
which also required an entire century to change.

O
The only explanation for this is anthropological. Once established in calcified
organizations, humans do two things: sabotage changes that might render people
dispensable, and ensure industry-wide emulation. In the 1960s, German auto
companies developed plans to scrap the entire combustion engine for an electrical
design. (The same existed in the 1970s in Japan, and in the I980s in France.). So for
40 years we might have been free of the wasteful and ludicrous dependence on fossil
fuels. Why didn't it go anywhere? Because auto executives understood pistons and
carburettors, and would loath to cannibalize their expertise, along with most of their
factories.

For questions 5 to 7
 e s
s
According to the passage, which of the following statements is true?
s
a
(1) Executives of automobile companies are inefficient and ludicrous.

l
C
(2) The speed at which an automobile is driven in a city has not changed much in a
century.

e
(3) Anthropological factors have fostered innovation in automobiles by promoting use of

il n
new technologies.

n
(4) Further innovation in jet engines has been more than incremental.

Question – 5
 e s
s s
Which of the following views does the author fully support in the passage?

a
(1) Nothing is as permanent as change.
(2) Change is always rapid.

C
(3) More money spent on innovation leads to more rapid change. l
e
(4) Over decades, structural change has been incremental.

il n
O n

Question – 6
 e s
s s
Which of the following best describes one of the main ideas discussed in the passage?
(1) Rapid change is usually welcomed in society.

l a
C
(2) Industry is not as innovative as it is made out to be.

e
(3) We should have less change than what we have now.

il n
(4) Competition spurs companies into radical innovation.

O n

Question – 7
 e s
s
Passage – III

s
Crinoline and croquet are out. As yet, no political activists have thrown themselves in

a
front of the royal horse on Derby Day. Even so, some historians can spot the parallels.

l
It is a time of rapid technological change. It is a period when the dominance of the

C
world's superpower is coming under threat. It is an epoch when prosperity masks
underlying economic strain. And, crucially, it is a time when policy-makers are confident

e
that all is for the best in the best of all possible worlds. Welcome to the Edwardian

il n
Summer of the second age of globalisation.
Spare a moment to take stock of what's been happening in the past few months. Let's

n
start with the oil price, which has rocketed to more than $65 a barrel, more than double
its level 18 months ago. The accepted wisdom is that we shouldn't worry our little heads

O
about that, because the incentives are there for business to build new production and
refining capacity, which will effortlessly bring demand and supply back into balance and
bring crude prices back to $25 a barrel. As Tommy Copper used to say, 'just like that'.
Then there is the result of the French referendum on the European Constitution, seen
as thick-headed luddites railing vainly against the modern world. What the French
needed to realize, the argument went, was that there was no alternative to the reforms
that would make the country more flexible, more competitive, more dynamic. Just the
sort of reforms that allowed Gate Gourmet to sack hundreds of its staff at Heathrow
after the sort of ultimatum that used to be handed out by Victorian mill owners. An
alternative way of looking at the French "non" is that our neighbours translate "flexibility"
as "you're fired". (Contd…)
For questions 8 to 11
 e s
s s
Finally, take a squint at the United States. Just like Britian a century ago, a period of
unquestioned superiority is drawing to a close. China is still a long way from matching

l a
America's wealth, but it is growing at a stupendous rate and economic strength brings
geo-political clout. Already, there is evidence of a new scramble for Africa as Washington

e C
and Beijing compete for oil stocks. Moreover, beneath the surface of the US economy, all
is not well. Growth looks healthy enough, but the competition from China and elsewhere

il n
has meant the world's biggest economy now imports far more than it exports. The US is
living beyond its means, but in this time of studied complacency a current account deficit
worth 6 percent of gross domestic product is seen as a sign of strength, not weakness.

O n
In this new Edwardian summer, comfort is taken from the fact that dearer oil has not had
the savage inflationary consequences of 1973-1974, when a fourfold increase in the cost
of crude brought an abrupt end to a postwar boom that had gone on uninterrupted for a
quarter of a century. True, the cost of living has been affected by higher transport costs,
but we are talking of inflation at 2.3 per cent and not 27 per cent. Yet the idea that higher
oil prices are of little consequence is fanciful. If people are paying more to fill up their cars
it leaves them with less to spend on everything else, but there is a reluctance to consume
less. In the 1970s unions were strong and able to negotiate large, compensatory pay
deals that served to intensify inflationary pressure. In 2005, that avenue is pretty much
closed off, but the abolition of all the controls on credit that existed in the 1970s means
that households are invited to borrow more rather than consume less.
(Contd…)
For questions 8 to 11
 e s
s s
The knock-on effects of higher oil prices are thus felt in different ways - through high

a
levels of indebtedness, in inflated asset prices, and in balance of payments deficits.

C l
There are those who point out, rightly, that modern industrial capitalism has proved
mightily resilient these past 250 years, and that a sign of the enduring strength of the
system has been the way it apparently shrugged off everything - a stock market crash,

e
9/11, rising oil prices - that has been thrown at it in the half decade since the millennium.

il n
Even so, there are at least three reasons for concern. First, we have been here before. In
terms of political economy, the first era of globalisation mirrored our own. There was a
belief in unfettered capital flows, in free migration. Eventually, though, there was a

O n
backlash, manifested in a struggle between free traders and protectionists, and in rising
labour militancy.
Second, the world is traditionally at its most fragile at times when the global balance of
power is in flux. By the end of the nineteenth century, Britain's role as the hegemonic
power was being challenged by the rise of the United States, Germany, and Japan while
the Ottoman and Hapsburg empires were clearly in rapid decline. Looking ahead from
2005, it is clear that over the next two or three decades, both China and India-which
together account for half the world's population - will flex their muscles.
Finally, there is the question of what rising oil prices tell us. The emergence of China and
India means global demand for crude is likely to remain high at a time when experts say
production is about to top out. If supply constraints start to bite, any decline in the prices
are likely to be short-term cyclical affairs punctuating a long upward trend.
For questions 8 to 11
 e s
s s
By the expression 'Edwardian Summer', the author refers to a period in which there is
(1) unparalleled luxury and opulence.

l a
C
(2) a sense of complacency among people because of all-round prosperity.

e
(3) a culmination of all-round economic prosperity.

il n
(4) an imminent danger lurking behind economic prosperity.

O n

Question – 8
 e s
s s
What, according to the author, has resulted in a widespread belief in the resilence of

a
modern capitalism?

C
increase in levels of indebtedness and inflated asset prices. l
(1) Growth in the economies of Western countries despite shocks in the form of

e
(2) Increase in the prosperity of Western countries and China despite rising oil prices.

il n
(3) Continued growth of Western economies despite a rise in terrorism, an increase in
oil prices and other similar shocks.

O n
(4) The success of continued reforms aimed at making Western economies more
dynamic, competitive and efficient.

Question – 9
 e s
s s
Which of the following best represents the key argument made by the author?

l a
(1) The rise in oil prices, the flux in the global balance of power and historical
precedents should make us question our belief that the global economic prosperity
would continue.

e C
(2) The belief that modern industrial capitalism is highly resilient and capable of

il n
overcoming shocks will be belied soon.

(3) Widespread prosperity leads to neglect of early signs of underlying economic

O n
weakness, manifested in higher oil prices and a flux in the global balance of power.
(4) A crisis is imminent in the West given the growth of countries like China and India
and the increase in oil prices.

Question – 10
 e s
s s
What can be inferred about the author's view when he states 'As Tommy Cooper used

a
to say "just like that"?

oil prices would reduce.

C l
(1) Industry has incentives to build new production and refining capacity and therefore

e
(2) There would be a correction in the price levels of oil once new production capacity

il n
is added.

(3) The decline in oil prices is likely to be short-term in nature.

n
(4) It is not necessary that oil prices would go down to earlier levels.

Question – 11
 Passage – IV
e s
s s
Demography of organisations, also called population ecology is an interesting field. It

a
proposes that organisational mortality processes depend upon the age and size of the

l
organisation, as well as on characteristics of populations and environments. Moreover,
there is evidence of an imprinting process -meaning that environmental conditions at

C
certain early phases in an organisation's development have long-term consequences. In

e
particular, organisations subject to intense competition have elevated mortality hazards at
all ages. A central theme is structural inertia, the tendency for organisations to respond

il n
slowly relative to the speed of environmental change. A central argument holds that the
inertia derives from the very characteristics that make organizations favoured actors in

n
modern society in terms of reliability and (formal) accountability. It follows that changes in
an organisation's core features are disruptive and in-crease mortality hazards, at least in

O
the short-run. Research on this subject tends to support this view. The concept of niche
provides a framework for relating environmental variations and competition to populations
in terms of dimensions of social, political, and economic environments. Most research in
this field builds on theories of resource partition and of density dependence. Resource-
partitioning theory concerns the relationship between increasing market concentration
and increasing proliferation of specialists in mature industries. The key implication of this
theory concerns the effects of concentration on the viability of specialist organisations
(those that seek to exploit a narrow range of resources). The theory of density-dependent
organisational evolution synthesizes ecological and institutional processes. It holds that
growth in the number of organisations in a population (density) drives processes of social
legitimatization and competition that, in turn, shape the vital rates.
For questions 12 to 15
 e s
s s
Consider the following: "Tata Steel, one of biggest steel makers in the world, was born
in Jamshedpur."

l a
If above passage is true, then it can be concluded that location of Tata Steel has been
one of the reasons for its success.
1. The conclusion is false.

e C
il n
2. This is a farfetched conclusion.

n
3 This is a valid conclusion.

(1) 1 only

(4) 1 and 2
O
(2) 2 only

(5) 2 and 3
(3) 3 only

Question – 12
 e s
s s
Most top-notch business consultants recommend changing the entire configuration of

a
an organisation's strategy, structure and systems. If the ideas contained in the passage
are agreed to, then such a recommendation:
(1) tends to rejuvenate the organization.

C l
e
(2) tends to make the organisation more aligned to the external environment.

il n
(3) tends to increase the competitiveness of the organisation by redefining its core
competence.

O n
(4) tends to increase the vulnerability of the organisation.
(5) tends to make the organisation industry leader by reformulating its niche.

Question – 13
 e s
s s
Recently it was reported that Indian textile sector was not doing well. If the ideas

a
contained in the passage are agreed to, then which of the following could be the
possible reason(s)?

C
1. All Indian firms are as old as international firms. l
e
2. Indian textile firms are dispersed all over the country, with most of them also having

il n
international presence.

3. Textile firms in India were subjected to trade union activity in the period from the
1960s to the 1980s.

(1) 1 only O n
(2) 2 only (3) 3 only
(4) 1 and 2 (5) 2 and 3

Question – 14
 e s
s s
"Tata steel, one of biggest steel makers in the world, was born in Jamshedpur. The very

a
success of Tata Steel could lead to its failure in future and hence the challenge for Tata

them."

C l
Steel is to recognize its strengths that made it successful in initial conditions and stick to

e
1. This is a valid conclusion.

il n
2. The conclusion is contrary to the ideas described in the passage.

3. The conclusion is internally contradictory.

(1) 1 only
O
(2) 2 only
n (3) 3 only

(4) 1 and 2 (5) 2 and 3

Question – 15
 e s
s
Passage – V

l s
If translated into English, most of the ways economists talk among themselves would sound plausible

a
enough to poets, journalists, businesspeople, and other thoughtful though non-economical folk. Like
serious talk anywhere — among boat desingers and baseball fans, say — the talk is hard to follow

e C
when one has not made a habit of listening to it for a while. The culture of the conversation makes the
words arcane. But the people in the unfamiliar conversation are not Martians. Underneath it all (the
economist‟s favourite phrase) conversational habits are similar. Economics uses mathematical

il n
models and statistical tests and market arguments, all of which look alien to the literary eye. But
looked at closely they are not so alien. They may be seen as figures of speech-metaphors, analogies,
and appeals to authority.

O n
Figures of speech are not mere frills. They think for us. Someone who thinks of a market as an
„invisible hand‟ and the organization of work as a „production function‟ and his coefficients as being
„significant‟, as an economist does, is giving the language a lot of responsibility. It seems a good idea
to look hard at his language.

If the economic conversation were found to depend a lot on its verbal forms, this would not mean that
economics would be not a science, or just a matter of opinion, or some sort of confidence game.
Good poets, though not scientists, are serious thinkers about symbols; good historians, though not
scientists, are serious thinkers about data.

(Contd…)
For questions 16 to 20
 e s
s s
Good scientists also use language. What is more (though it remains to be shown) they use

a
the cunning of language, without particularly meaning to. The language used is a social object,

C
attention to the other minds present when one speaks.
l
and using language is a social act. It requires cunning (or, if you prefer, consideration),

e
The paying of attention to one‟s audience is called „rhetoric‟, a word that I later exercise hard.
One uses rhetoric, of course, to warn of a fire in a theatre or to arouse the xenophobia of the

il n
electorate. This sort of yelling is the vulgar meaning of the word, like the president‟s „heated
rhetoric‟ in a press conference or the „mere rhetoric‟ to which our enemies stoop. Since the

O n
Greek flame was lit, though, the word has been used also in a broader and more amiable
sense, to mean the study of all the ways of accomplishing things with language: inciting a mob
to lynch the accused, to be sure, but also persuading readers of a novel that its characters
breathe, or bringing scholars to accept the better argument and reject the worse.

The question is whether the scholar- who usually fancies himself an announcer of „results‟ or a
stater of „conclusions‟ free of rhetoric — speaks rhetorically. Does he try to persuade? It would
seem so. Language, I just said, is not a solitary accomplishment. The scholar doesn‟t speak
into the void, or to himself. He speaks to a community of voices. He desires to be heeded,
praised, published, imitated, honoured, en-Nobeled. These are the desires. The devices of
language are the means.
(Contd…)

For questions 16 to 20
 e s
s s
Rhetoric is the proportioning of means to desires in speech. Rhetoric is an economics of language,

a
the study of how scarce means are allocated to the insatiable desires of people to be heard. It seems

C l
on the face of it a reasonable hypothesis that economists are like other people in being talkers, who
desire listeners whey they go to the library or the laboratory as much as when they go to the office or
the polls. The purpose here is to see if this is true, and to see if it is useful: to study the rhetoric of
economic scholarship.

e
il n
The subject is scholarship. It is not the economy, or the adequacy of economic theory as a description
of the economy, or even mainly the economist‟s role in the economy. The subject is the conversation

O n
economists have among themselves, for purposes of persuading each other that the interest elasticity
of demand for investment is zero or that the money supply is controlled by the Federal Reserve.

Unfortunately, though, the conclusions are of more than academic interest. The conversations of
classicists or of astronomers rarely affect the lives of other people. Those of economists do so on a
large scale. A well known joke describes a May Day parade through Red Square with the usual mass
of soldiers, guided missiles, rocket launchers. At last come rank upon rank of people in gray business
suits. A bystander asks, “Who are those?” “Aha!” comes the reply, “Those are economists: you have
no idea what damage they can do!” Their conversations do it.

For questions 16 to 20
 e s
s s
According to the passage, which of the following is the best set of reasons for which

a
one needs to „look hard‟ at an economist‟s language?
A.
B.
Economists accomplish a great deal through their language.

C
Economics is an opinion-based subject.
l
e
il n
C. Economics has a great impact on other‟s lives.
D. Economics is damaging.

(1) A and B
(3) A and C O n
(2) C and D
(4) B and D

Question – 16
 e s
s s
In the light of the definition of rhetoric given in the passage, which of the following will

a
have the least element of rhetoric?
(1) An election speech
(2) An advertisement jingle
C l
e
il n
(3) Dialogues in a play
(4) Commands given by army officers

O n

Question – 17
 e s
s s
As used in the passage, which of the following is the closest meaning of the statement

a
„The culture of the conversation makes the words arcane‟?
(1) Economists belong to a different culture.

C
(2) Only mathematicians can understand economists.
l
e
il n
(3) Economists tend to use terms unfamiliar to the lay person, but depend on familiar
linguistic forms.

n
(4) Economists use similes and adjectives in their analysis.

Question – 18
 e s
s s
As used in the passage, which of the following is the closest alternative to the word

a
„arcane‟?
(1) Mysterious
(3) Covert
(2) Secret

C
(4) Perfidious
l
e
il n
O n

Question – 19
 e s
s s
Based on your understanding of the passage, which of the following conclusions would

a
you agree with?

C
(2) The heliocentric view is superior because of better rhetoric.
l
(1) The geocentric and the heliocentric views of the solar system are equally tenable.

e
il n
(3) Both views use rhetoric to persuade.
(4) Scientists should not use rhetoric.

O n

Question – 20