Directions (Q. 1 to 10): Read the following passage carefully and answer the questions given below it. Certain words have been given in bold to help you locate them while answering some of the questions.
The great fear in Asia a short while ago was that the region would suffer through the wealth destruction already taking place in the U.S. as a result of the financial crisis. Stock markets tumbled as exports plunged and economic growth deteriorated. Lofty property prices in China and elsewhere looked set to bust as credit tightened and buyers evaporated. But now, with surprising speed, fear in Asia is swinging back to greed as the region shows signs of recovery and property and stock prices are soaring in many parts of Asia.
Why should the sharp Asian turnaround be greeted with scepticism? Higher asset prices mean households feel wealthier and better able to spend, which could further fuel the region’s nascent rebound. But just as easily, Asia could soon find itself saddled with overheated markets similar to the U.S. housing market. In short, the world has not changed, it has just moved places.
The incipient bubble is being created by government policy. In response to the global credit crunch of 2008, policy makers in Asia slashed interest rates and flooded financial sectors with cash in frantic attempts to keep loans flowing and economies growing. These steps were logical for central bankers striving to reverse a deepening economic crisis. But there’s evidence that there is too much easy money around. It’s winding up in stocks and real estate, pushing prices up too far and too fast for the underlying economic fundamentals. Much of the concern is focused on China, where government stimulus efforts have been large and effective. Money in China has been especially easy to find. Aggregate new bank lending surged 201% in the first half of 2009 from the same period a year earlier, to nearly $ 1.1 trillion. Exuberance over a quick recovery-which was given a boost by China’s surprisingly strong 7.9% GDP growth in the second quarter-has buoyed investor sentiment not just for stocks but also for real estate.
Former U.S. Federal Reserve Chairman Alan Greenspan argued that bubbles could only be recognised in hindsight. But investors-who have been well schooled in the dangers of bubbles over the past decade are increasingly wary that prices have risen too far, and that the slightest bit of negative economic news could knock markets for a loop. These fears are compounded by the possibility that Asia’s central bankers will begin taking steps to shut off the money. Rumours that Beijing was on the verge of tightening credit led to Shanghai stocks plunging 5%. Yet many economists believe that, “there is close to a zero possibility that the Chinese government will do anything this year that constitutes tightening.” And without a major shift in thinking, the easy-money conditions will stay in place. In a global economy that has produced more dramatic ups and downs than anyone thought possible over the past two years, Asia may be heading for another disheartening plunge.
Q.1. To which of the following has the author attributed the 2008 Asian financial crisis?
(A) Asian government’s continuous efforts to taper off the economic stimulus
(B) Greed of Asian investors causing them to trade stocks of American companies at high prices
(C) Inflated real estate prices in Asian countries
1) None
2) Only (A)
3) Only (C)
4) Only (A) and (B)
5) Only (B)
(A) Asian government’s continuous efforts to taper off the economic stimulus
(B) Greed of Asian investors causing them to trade stocks of American companies at high prices
(C) Inflated real estate prices in Asian countries
1) None
2) Only (A)
3) Only (C)
4) Only (A) and (B)
5) Only (B)
Q.2. Which of the following can be inferred from the passage?
(A) All Asian economies are recovering at the same pace.
(B) Experts are apprehensive about the state of Asian economies despite their recovery.
(C) Developed countries should implement the same economies reforms as Asian ones.
1) Only (A)
2) Only (B) and (C)
3) Only (A) and (B)
4) Only (B)
5) None of these
(A) All Asian economies are recovering at the same pace.
(B) Experts are apprehensive about the state of Asian economies despite their recovery.
(C) Developed countries should implement the same economies reforms as Asian ones.
1) Only (A)
2) Only (B) and (C)
3) Only (A) and (B)
4) Only (B)
5) None of these
Q.3. Why has investor confidence in the Chinese stock market been restored?
(A) Existing property prices which are stable and affordable
(B) The government has decided to tighten credit
(C) Healthy growth of the economy indicated by GDP figures
1) Only (C)
2) Only (A) and (B)
3) All (A), (B) and (C)
4) Only (B)
5) None of these
(A) Existing property prices which are stable and affordable
(B) The government has decided to tighten credit
(C) Healthy growth of the economy indicated by GDP figures
1) Only (C)
2) Only (A) and (B)
3) All (A), (B) and (C)
4) Only (B)
5) None of these
Q.4. Which of the following can be said about the Chinese government’s efforts to revive the economy?
1) These were largely unsuccessful as only the housing market improved.
2) The government’s concern was to boost investor confidence in stocks.
3) These efforts were ineffectual as the economy recovered owing to the US market stabilising.
4) These were appropriate but failed to accomplish the goal of economic revival.
5) They blindly imitated the economic reforms adopted by the U.S..
1) These were largely unsuccessful as only the housing market improved.
2) The government’s concern was to boost investor confidence in stocks.
3) These efforts were ineffectual as the economy recovered owing to the US market stabilising.
4) These were appropriate but failed to accomplish the goal of economic revival.
5) They blindly imitated the economic reforms adopted by the U.S..
Q.5. What is the author’s main objective in writing the passage?
1) Illustrating that Asian economies are more sound than those of developed countries.
2) Disputing financial theories about how recessions can be predicted and avoided.
3) Warning Asian countries about the dangers of favouring fast growth and profits over sound economic principles.
4) Extolling China’s incredible growth and urging other countries to emulate it.
5) Advising governments about the changes in policy to strengthen economic fundamentals.
1) Illustrating that Asian economies are more sound than those of developed countries.
2) Disputing financial theories about how recessions can be predicted and avoided.
3) Warning Asian countries about the dangers of favouring fast growth and profits over sound economic principles.
4) Extolling China’s incredible growth and urging other countries to emulate it.
5) Advising governments about the changes in policy to strengthen economic fundamentals.
Q.6. Choose the word or group of words which is most Similar in meaning to the word given in bold as used in the passage.
Flooded
1) Surged
2) Saturated
3) Overflowed
4) Deluge
5) Overcome
Flooded
1) Surged
2) Saturated
3) Overflowed
4) Deluge
5) Overcome
Q.7. Choose the word or group of words which is most Similar in meaning to the word given in bold as used in the passage.
Evaporated
1) Dehydrated
2) Melted
3) Vaporised
4) Vanished
5) Dodged
Evaporated
1) Dehydrated
2) Melted
3) Vaporised
4) Vanished
5) Dodged
Q.8. Choose the word or group of words which is most Similar in meaning to the word given in bold as used in the passage.
Fuel
1) Petrol
2) Stimulate
3) Sustain
4) Heat
5) Charge
Fuel
1) Petrol
2) Stimulate
3) Sustain
4) Heat
5) Charge
Q.9. Choose the word or group of words which is Opposite in meaning to the word given in bold as used in the passage.
Buoyed
1) Heavy
2) Stifled
3) Numbed
4) Dull
5) Abated
Buoyed
1) Heavy
2) Stifled
3) Numbed
4) Dull
5) Abated
Q.10. Choose the word or group of words which is Opposite in meaning to the word given in bold as used in the passage.
Sharp
1) Blunt
2) Incomplete
3) Naive
4) Moderate
5) Slow
Answers.
Q.1. 3Q.2. 4
Q.3. 1
Q.4. 2
Q.5. 3
Q.6. 3
Q.7. 4
Q.8. 2
Q.9. 5
Q.10. 5
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