Passage:
Financial literacy in India has become an essential skill in today’s economy, where understanding basic financial concepts such as budgeting, investing, and saving is crucial. Despite India’s economic growth, a significant portion of the population still lacks basic financial knowledge, which hampers their ability to make informed financial decisions. This gap in financial literacy can lead to poor financial choices, such as excessive borrowing, inadequate savings, and a lack of financial planning for the future.
The government, along with various non-governmental organizations (NGOs), has launched several initiatives aimed at improving financial literacy across different demographics. Programs like the Pradhan Mantri Jan-Dhan Yojana (PMJDY) aim to increase access to financial services and educate the public about the benefits of banking services, including the safekeeping of money, the importance of saving, and the convenience of transactions.
Schools and educational institutions have also started to integrate financial education into their curricula, recognizing the importance of this knowledge from an early age. This education helps individuals develop a healthy financial habit early in life, which can significantly affect their future economic outcomes. By understanding financial principles, individuals are better equipped to navigate the complexities of the financial world, from choosing the right insurance policies to investing in stocks and managing debts.
The rise of digital finance tools like mobile banking, online investment platforms, and digital wallets has further underscored the need for financial literacy. While these tools offer convenience and accessibility, they also pose potential risks such as fraud and financial scams. Educating the public about safe financial practices is therefore critical in ensuring that they can use these tools effectively and securely.
Overall, financial literacy in India is not just about understanding money management—it’s about creating a more informed, empowered, and financially stable society. As more individuals gain financial knowledge, they contribute to a more robust economic system where financial inclusion and stability are priorities.
A) Increased foreign investments
B) Higher financial stability
C) Poor financial decision-making
D) Enhanced economic growth
Correct Answer: C) Poor financial decision-making
Explanation: The passage states that a lack of financial literacy can lead to poor financial choices such as excessive borrowing and inadequate savings.
A) Digital India
B) Make in India
C) Swachh Bharat Abhiyan
D) Pradhan Mantri Jan-Dhan Yojana (PMJDY)
Correct Answer: D) Pradhan Mantri Jan-Dhan Yojana (PMJDY)
Explanation: PMJDY is mentioned in the passage as an initiative that helps increase financial services access and educates the public about banking benefits.
A) Limiting financial education to higher education
B) Integrating financial education into their curricula
C) Ignoring financial education in favor of traditional subjects
D) Outsourcing financial education to private companies
Correct Answer: B) Integrating financial education into their curricula
Explanation: The passage notes that schools and educational institutions are integrating financial education into their curricula to impart essential financial knowledge from an early age.
A) Reduced convenience
B) Increased financial literacy
C) Potential for fraud and financial scams
D) Decrease in digital adoption
Correct Answer: C) Potential for fraud and financial scams
Explanation: The passage highlights that while digital finance tools offer convenience, they also pose risks such as fraud and financial scams.
A) By creating a more informed and financially stable society
B) By ensuring all citizens are wealthy
C) By reducing governmental control over finance
D) By eliminating the need for financial regulations
Correct Answer: A) By creating a more informed and financially stable society
Explanation: The passage concludes that financial literacy helps create a more informed, empowered, and financially stable society, contributing to a stronger economic system.
A) Complete deregulation of financial markets
B) Financial inclusion and stability
C) High rates of consumer spending
D) Privatization of financial institutions
Correct Answer: B) Financial inclusion and stability
Explanation: The passage mentions that as more individuals gain financial knowledge, it contributes to a robust economic system where financial inclusion and stability are priorities.
A) To ensure compliance with international standards
B) To influence global economic policies
C) To guarantee high returns on all investments
D) To manage debts and invest wisely
Correct Answer: D) To manage debts and invest wisely
Explanation: The passage points out that understanding financial principles helps individuals navigate financial complexities, such as managing debts and investing in stocks wisely.
A) It guarantees future wealth accumulation
B) It minimizes personal economic risks
C) It influences personal economic outcomes positively
D) It eliminates all financial risks
Correct Answer: C) It influences personal economic outcomes positively
Explanation: The passage implies that developing healthy financial habits through education can significantly affect individuals’ future economic outcomes positively.
A) It helps individuals use financial tools effectively and securely
B) It ensures that all investments will succeed
C) It prevents the government from intervening in personal finances
D) It allows people to avoid paying taxes
Correct Answer: A) It helps individuals use financial tools effectively and securely
Explanation: Educating the public about safe financial practices is crucial for ensuring that individuals can use digital finance tools effectively and avoid risks like scams.
A) It reduces the global dependency on finance
B) It contributes to a more robust economic system
C) It shifts all economic control to the public
D) It creates a uniform global economic standard
Correct Answer: B) It contributes to a more robust economic system
Explanation: The passage emphasizes that increasing financial literacy contributes to a more robust economic system by fostering financial inclusion and stability, benefiting society at large.
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