Read the following passage and answer the question that follows:
For many years, the World Bank Group has provided crucial support to those developing countries that have sought to reap the benefits of financial development while also minimizing risks to financial stability. This work is becoming even more critical as the world seeks to avoid the devastating effects of future financial crises while utilizing the opportunities of modern financial services to meet the rising aspirations of the poor. This is possible only through efficient financial systems with stakeholders whose incentives are aligned with those of society as a whole. Crowding-in the private sector is crucial not only as an engine of growth in developing countries, but also as a foundation for the kind of market discipline that can prevent excessive risk-taking and put capital in the hands of the entrepreneurs who can invest in the future. The right regulatory and supervisory environment—accompanied by effective financial sector policies—is key to creating a financial system that can attract private capital and align private incentives with the public good.
Q. With reference to the above passage, which of the following statements are correct?
Select the correct answer using the code given below:
Read the following passage and answer the question that follows:
For many years, the World Bank Group has provided crucial support to those developing countries that have sought to reap the benefits of financial development while also minimizing risks to financial stability. This work is becoming even more critical as the world seeks to avoid the devastating effects of future financial crises while utilizing the opportunities of modern financial services to meet the rising aspirations of the poor. This is possible only through efficient financial systems with stakeholders whose incentives are aligned with those of society as a whole. Crowding-in the private sector is crucial not only as an engine of growth in developing countries, but also as a foundation for the kind of market discipline that can prevent excessive risk-taking and put capital in the hands of the entrepreneurs who can invest in the future. The right regulatory and supervisory environment—accompanied by effective financial sector policies—is key to creating a financial system that can attract private capital and align private incentives with the public good.
Q. With reference to the above passage, which of the following statements are correct?
Select the correct answer using the code given below:
The correct option is C
1 and 3 only
Explanation:
Statement 1 is correct: Refer the following line, “This work is becoming even more critical as the world seeks to avoid the devastating effects of future financial crises while utilizing the opportunities of modern financial services to meet the rising aspirations of the poor. This is possible only through efficient financial systems with stakeholders whose incentives are aligned with those of society as a whole.”
The statement is explained in those lines. Hence it is correct.
Statement 2 is incorrect: Refer to these lines, “This work is becoming even more critical as the world seeks to avoid the devastating effects of future financial crises while utilizing the opportunities of modern financial services to meet the rising aspirations of the poor.”
It is mentioned that the world is cautious about avoiding a financial crisis like before, but there is nothing mentioned about developing countries staying away from availing financial help. Hence the statement is incorrect.
Statement 3 is correct: Refer to these lines, “Crowding-in the private sector is crucial not only as an engine of growth in developing countries, but also as a foundation for the kind of market discipline that can prevent excessive risk-taking and put capital in the hands of the entrepreneurs who can invest in the future. The right regulatory and supervisory environment—accompanied by effective financial sector policies—is key to creating a financial system that can attract private capital and align private incentives with the public good.”
From here it is evident that a right policy and proper regulatory body can help the developing countries benefit from the private investments.
1 and 3 only
Explanation:
Statement 1 is correct: Refer the following line, “This work is becoming even more critical as the world seeks to avoid the devastating effects of future financial crises while utilizing the opportunities of modern financial services to meet the rising aspirations of the poor. This is possible only through efficient financial systems with stakeholders whose incentives are aligned with those of society as a whole.”
The statement is explained in those lines. Hence it is correct.
Statement 2 is incorrect: Refer to these lines, “This work is becoming even more critical as the world seeks to avoid the devastating effects of future financial crises while utilizing the opportunities of modern financial services to meet the rising aspirations of the poor.”
It is mentioned that the world is cautious about avoiding a financial crisis like before, but there is nothing mentioned about developing countries staying away from availing financial help. Hence the statement is incorrect.
Statement 3 is correct: Refer to these lines, “Crowding-in the private sector is crucial not only as an engine of growth in developing countries, but also as a foundation for the kind of market discipline that can prevent excessive risk-taking and put capital in the hands of the entrepreneurs who can invest in the future. The right regulatory and supervisory environment—accompanied by effective financial sector policies—is key to creating a financial system that can attract private capital and align private incentives with the public good.”
From here it is evident that a right policy and proper regulatory body can help the developing countries benefit from the private investments.
