Directions (1-10) : Read the following passage carefully and answer the questions. Certain words/phrases are given in (bold) to help you locate them while answering some of the questions. This was supposed to be the year when monetary policy started to get back to normal. Seven years after Lehman Brothers collapsed, central banks were expected to edge away from a policy of near-zero interest rates. But now, with 2015 almost over, the Federal reserve has yet to push up rates while other rich-world central banks are focused more on easing than on tightening. Sweden's Riksbank extended its quantitaitve easing (QE) programme last month. The President of the European Central Bank, too has indicated that further easing may come in December, probably by adjusting the pace, scale or type of asset purchases in its QE regime. More than two-fifths of economists forecast that the Bank of Japan would pick up the pace of its monetary easing. Even if policy is kept unchanged, the bank plans to expand the money supply at an annual rate of ¥80 trillion ($664 billion). However, for emerging markets, on balance, slightly more emerging central banks have been tightening than cutting. But China cut interest rates in October, the sixth reduction in the last year. India unveiled a half-percentage point rate-cut in late September.
The attitude of central banks reflects their worries about economic growth. The IMF just lowered its global growth forecast to 3.1% for 2015, with cuts applying to both advanced and developing economies.
Inflation is also low in Europe, North America and Asia, giving central banks more feedom to be supportive. The benign interest-rate outlook is one reason why equities have recovered from the wobbles they suffered in August and September. The other main reason why markets have rallied is a more sanguine view of the Chinese economy. Official Chinese economy. Official figures for third-quarter GDP showed growth of 6.9% and, although some have doubts about the data, it was noticeable that the IMF did not downgrade its forecast for Chiness growth in its latest global outlook. But the optimism should not be taken too far. Other market indicators still suggest investors are worried about sluggish growth and deflation- the yield on the ten-year Treasury bond is hovering around 2%, not a level that suggests investors expect normal levels of economic growth to return any time soon.
American companies are also struggling to maintain the robust profit growth they have shown since 2009. While third-quarter profits for S&P 500 companies are marginally ahead of expectations (as is usually the case), they are still likely to be 4% lower than they were a year ago; sales will probably fall by 3%. It is simply hard to keep pushing up profits when global GDP growth is subdued. The number of American companies citing a slowing global economy as affecting their profits and revenues is more than 50% higher than a year ago, according to Thomson Reuters. The news is no better in Erope, where third-quity markets are caught in something of an awkward equilibrium. Positive economic news will make the outlook for profits more (rosy) but will also mean that the Fed is more likely to push up rates. And bad economic news may mean a respite from monetary tightening but is still bad news. This expalins the rather bumpy ride that stockmarkets have had in 2015. The lack of profit growth makes it hard for markets to surge ahead. But without higher interest rates, or evidence that big economies are slipping into (outright) recession, share prices are unlikely to collapse. Central banks may have helped stockmarkets in an era of low growth by making other assets less attractive; the result was a positive shift in share valuations. But slow growth hasn't gone away.
1. Which of the following is true in the context of the passage?
- Central banks in developed countries are unnecessarily delaying raising interest rates.
- The IMF has issued strong warnings to China's central bank of lower inflation.
- IMF and developed economies are needlessly alarmed about the health of China's economy.
- None of the given options is true in the context of the passage.
Ans : 1
2. Choose the word which is most nearly the same in meaning as the word (ADJUSTING) given in (bold) as used in the passage.
Ans : 1
3. Which of the following best describes the author's view of the actions taken by central banks?
- The steps are futile and caused imbalances in the global economy.
- They should raise interest rates instead with immediate effect.
- They have been inactive taking no steps other than keeping interest rates low.
- Other than those given as options
Ans : 2
4. Choose the group of word which is most nearly the (same) in meaning as the word (EDGE) given in (bold) as used in the passage.
- Outer limit
- Brink of
- Sharp side
- Move carefully
Ans : 4
5. Which of the following describes the health of global stock markets in 2015?
- Many stock markets in India crashed on account of the state of China's economy.
- Stock markets are not in good shape on account of the strict regulations of central banks.
- Stock markets have only showed uneven and subdued growth.
- None of the given options describes the health of global stock markets in 2015.
Ans : 3
6. According to the passage, which of the following is/are factor(s) that has/have impacted global economic growth in 2015?
A. Withdrawing of Quantitative Easing by European economies.
B. High rate of inflation in large Asian economies.
C. Price of assets and commodities like oil.
- Only A
- Only B
- All A, B and C
- None of the above
Ans : 4
7. Which of the following is the central idea of the passage?
- Governments are holding back central banks from implementing unpopular but good reforms.
- China is headed for a recession and is likely to plunge the world into the recession like the one in 2008.
- The monetary policies implemented by developed countries are adversely affecting emerging ones.
- The global economy is doing well in the last quarter of 2015 and will soon be thriving.
Ans : 1
8. Choose the word which is most nearly the opposite in meaning as the word OUTRIGHT given in bold as used in the passage.
Ans : 4
9. What do the statistics regarding the third quarter profits of S&P 500 American Companies convey?
- With slow global economic growth, the profitability of these companies will be affected.
- American companies have not even achieved 50 percent of their growth projections.
- American companies are growing twice as much as they did in 2009.
- These are inflated and growth of these companies is negligible.
Ans : 1
10. Choose the word which is most nearly the opposite in meaning as the word (ROSY) given in (bold) as used in the passage.
Ans : 2