Reading Comprehension – I’ve been following the economic crisis for more

Slot – 3 – RC

I’ve been following the economic crisis for more than two years now. I began working on the subject as part of the background to a novel, and soon realized that I had stumbled across the most interesting story I’ve ever found. While I was beginning to work on it, the British bank Northern Rock blew up, and it became clear that, as I wrote at the time, “If our laws are not extended to control the new kinds of super-powerful, super-complex, and potentially superrisky investment vehicles, they will one day cause a financial disaster of global-systemic proportions.” . . . I was both right and too late, because all the groundwork for the crisis had already been done—though the sluggishness of the world’s governments, in not preparing for the great unraveling of autumn 2008, was then and still is stupefying. But this is the first reason why I wrote this book: because what’s happened is extraordinarily interesting. It is an absolutely amazing story, full of human interest and drama, one whose byways of mathematics, economics, and psychology are both central to the story of the last decades and mysteriously unknown to the general public. We have heard a lot about “the two cultures” of science and the arts—we heard a particularly large amount about it in 2009, because it was the fiftieth anniversary of the speech during which C. P. Snow first used the phrase. But I’m not sure the idea of a huge gap between science and the arts is as true as it was half a century ago—it’s certainly true, for instance, that a general reader who wants to pick up an education in the fundamentals of science will find it easier than ever before. It seems to me that there is a much bigger gap between the world of finance and that of the general public and that there is a need to narrow that gap, if the financial industry is not to be a kind of priesthood, administering to its own mysteries and feared and resented by the rest of us. Many bright, literate people have no idea about all sorts of economic basics, of a type that financial insiders take as elementary facts of how the world works. I am an outsider to finance and economics, and my hope is that I can talk across that gulf.

My need to understand is the same as yours, whoever you are. That’s one of the strangest ironies of this story: after decades in which the ideology of the Western world was personally and economically individualistic, we’ve suddenly been hit by a crisis which shows in the starkest terms that whether we like it or not—and there are large parts of it that you would have to be crazy to like—we’re all in this together. The aftermath of the crisis is going to dominate the economics and politics of our societies for at least a decade to come and perhaps longer.

Q.1 Which one of the following, if true, would be an accurate inference from the first sentence of the passage?

1. The author is preoccupied with the economic crisis because he is being followed.
2. The author’s preoccupation with the economic crisis is not less than two years old.
3. The author has witnessed many economic crises by travelling a lot for two years.
4. The economic crisis outlasted the author’s preoccupation with it.

Answer: 2

Q.2 According to the passage, the author is likely to be supportive of which one of the following programmes?

1. . Economic policies that are more sensitively calibrated to the fluctuations of the market.
2. The complete nationalisation of all financial institutions.
3. An educational curriculum that promotes developing financial literacy in the masses.
4. An educational curriculum that promotes economic research.

Answer: 3

Q.3 Which one of the following, if false, could be seen as supporting the author’s claims?

1. Most people are yet to gain any real understanding of the workings of the financial world.
2. The global economic crisis lasted for more than two years.
3. The economic crisis was not a failure of collective action to rectify economic problems.
4. The huge gap between science and the arts has steadily narrowed over time.

Answer: 3

Q.4 Which one of the following best captures the main argument of the last paragraph of the passage?

1. The ideology of individualism must be set aside in order to deal with the crisis.
2. Whoever you are, you would be crazy to think that there is no crisis.
3. In the decades to come, other ideologies will emerge in the aftermath of the crisis
4. The aftermath of the crisis will strengthen the central ideology of individualism in the Western world.

Answer: 1

Q.5 All of the following, if true, could be seen as supporting the arguments in the passage, EXCEPT?

1. The difficulty with understanding financial matters is that they have become so arcane.
2. Economic crises could be averted by changing prevailing ideologies and beliefs.
3. The story of the economic crisis is also one about international relations, global financial security, and mass psychology.
4. The failure of economic systems does not necessarily mean the failure of their ideologies

Answer: 4

Solutions:
Q.1 Refer to the first sentence, “I’ve been following the economic crisis for more than two years now.”
Options 1 and 3 can be immediately eliminated. They cannot be inferred from the first sentence.
Between options 2 and 4, we choose option 2. We are not sure if option 4 is true or not but we are definitely sure that the author’s focus on the economic crisis is not less than two years old if we interpret the first sentence.
Hence, the correct answer is option 2.

Q.2 Refer to the following extract, “It seems to me that there is a much bigger gap between the world of finance and that of the general public and that there is a need to narrow that gap,… ” Thus, the author is in favour of educational curriculum that promotes developing financial literacy in the masses. Therefore, option 3 is the correct answer.
Options 1, 2 and 4 cannot be inferred from the passage.
Hence, the correct answer is option 3.

Q.3 Options 1, 2 and 4 are true statements and can thus be eliminated.
Option 3 is a false statement and supports the author’s claim that the economic crisis was not due to a failure of collective action but was instead due to inadequate laws. Refer to the extract, “laws not controlling the new kinds of super-powerful, super-complex, and potentially super-risky investment vehicles, they will one day cause a financial disaster of global-systemic proportions.”
Hence, the correct answer is option 3.

Q.4 Refer to the relevant extract, “after decades in which the ideology of the Western world was personally and economically individualistic, we’ve suddenly been hit by a crisis which shows in the starkest terms that whether we like it or not—and there are large parts of it that you would have to be crazy to like—we’re all in this together.” The author is blaming individualism for the economic crisis. Thus, the correct answer is option 1.
The extract implies we would be crazy to favour individualism. Eliminate option 2.
Options 3 and 4 have neither been mentioned nor can they be inferred from the passage.
Hence, the correct answer is option 1.

Q.5 Option 1 is true and supports the passage.
Options 2 and 3 are also supported by the passage.
Option 4 is a false statement. The author blames the ideology of individualism for the economic crisis.
Hence, the correct answer is option 4.

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