Directions (1-7): Read the following passage carefully and answer the questions given below it. Certain words have been printed 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 with surprising speed, fear in Asia swung 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 skepticism? 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 recognized 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. Rumors 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.
Q1. Which of the following has the author attributed the 2008 Asian financial crisis bubble?
(i) Reluctance of Asian governments to provide stimulus in the markets
(ii) Greed of Asian investors causing them to trade stocks of American companies at high prices
(iii) Inflated real estate prices in Asian countries
(a) None
(b) Only (i)
(c) Only (iii)
(d) Only (i) and (ii)
(e) Only (ii)
Q2. Which of the following can be inferred from the passage?
(i) All Asian economies are recovering at the same pace
(ii) Experts are apprehensive about the state of Asian economies despite their recovery
(iii) Developed countries should implement the same economies reforms as Asian ones
(a) Only (i)
(b) Only (ii) and (iii)
(c) Only (i) and (ii)
(d) Only (ii)
(e) None of these
Q3. Why has investor confidence in the Chinese stock market been restored?
(i) Existing property prices which are stable and affordable
(ii) The government has decided to tighten credit
(iii) Healthy growth of the economy indicated by GDP figures
(a) Only (iii)
(b) Only (i) and (ii)
(c) All (i), (ii) and (iii)
(d) Only (ii)
(e) None of these
Q4. Which of the following can be said about the Chinese government’s efforts to revive the economy?(a) These were largely unsuccessful as only the housing market improved
(b) The government’s only concern was to boost investor confidence in stocks
(c) These efforts were ineffectual as the economy recovered owing to the US market stabilizing.
(d) These were appropriate and accomplished the goal of economic revival
(e) They blindly imitated the economic reforms adopted by the US
Q5. What does the author want to convey through the phrase “The world has not changed it has just moved places”?
(a) At present countries are more dependent on Asian economics than on the US economy
(b) Economies has become interlinked on account of globalization
(c) Asian governments are implementing the same economic reforms as developed countries
(d) Reforms implemented in Asian markets can have the same negative impact as it had on the American markets, it was just a matter of time.
(e) None of these
Q6. Which is the following is most similar in meaning with the Buoyed highlighted in the passage?
(a) Hassles
(b) Cheered
(c) Detroiter
(d) Fragile
(e) None of these
Q7. Which of the following word is most opposite in meaning with Stimulus highlighted in the passage?
(a) Booster
(b) Encouragement
(c) Enhanced
(d) Deterrent
(e) Promotion
Directions (8-10): In each of the following questions four words are given, of which two words are most nearly the same or opposite in meaning. Find the two words which are most nearly the same or opposite in meaning and indicate the number of the correct letter combination.
Q8.
(A) Disallow
(B) Discuss
(C) Composure
(D) Insanity
(a)A and B
(b)B and C
(c)A and C
(d)C and D
(e)A and D
Q9.
(A) Ferocious
(B) Savage
(C) Overrule
(D) Argue
(a)A and B
(b)B and C
(c)A and C
(d)B and D
(e)A and D
Q10.
(A) Distressed
(B) bicker
(C) quarrel
(D) Release
(a)A and B
(b)B and C
(c)A and C
(d)B and D
(e)A and D
Solutions
S1. Ans. (a)
Sol. The passage says, ‘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.’
S2. Ans. (d)
Sol. The passage says, ‘Exuberance over a quick recovery –which was given a boost by China’s surprisingly strong 7.9% G DP growth in the second quarter -has buoyed investor sentiment not just for stocks but also for real estate.’
S3. Ans. (a)
Sol. The passage says, ‘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.’
S4. Ans. (d)
Sol. The passage says, ‘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.’
S5. Ans. (d)
Sol. The passage says, ‘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.’
S6. Ans. (b)
Sol. Buoyed means cheerful and confident.
Cheered is the most similar in meaning with the given word. Hence, option (b) is the right answer choice.
S7. Ans. (d)
Sol. Stimulus means a thing that arouses activity or energy in someone or something; a spur or incentive.
Deterrent is the most opposite in meaning with the given word. Hence, option (d) is the right answer choice.
S8. Ans. (d)
Sol. C and D are opposite in meaning. Hence, option (d) is the right answer choice.
S9. Ans. (a)
Sol. A and B are similar in meaning. Hence, option (a) is the right answer choice.
S10. Ans. (b)
Sol. B and C are similar in meaning with each other. Hence, option (b) is the right answer choice.
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