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I’ve been following the economic crisis for more | CAT VARC Questions - Reading Comprehension

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The question below is from previous year CAT question from CAT 2020 exam comes from CAT Reading Comprehension: I’ve been following the economic crisis for more

Find out by answering this question which tests an aspirant’s CAT VARC skills:

CAT 2020 - Slot 3 - Set 4 - I’ve been following the economic crisis for more

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 super-risky 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. 14: Which one of the following, if false, could be seen as supporting the author’s claims?

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

Correct Answer: 3

Trickily worded question. The option that, if false, supports the author’s claims is the one that, if true, does not support the author’s claims.

From the first line of the passage, we know that the author has been following the economic crisis for more than two years. The author clearly states that he is “not sure the idea of a huge gap between science and the arts is as true as it was half a century ago”. Also, according to the author, “many bright, literate people have no idea about all sorts of economic basics”. So, options 1, 2 and 4, if true, support the author’s claims.

On the other hand, the author states that the crisis was due to “the sluggishness of the world’s governments” not preparing for the great unraveling of autumn 2008 . The statement that the economic crisis was not a failure of collective action to rectify economic problems goes against the author’s view. So, option 3, if true, does not support the author’s claims.

Q. 15: Which one of the following, if true, would be an accurate inference from the first sentence of the passage?

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

Correct Answer: 1

From the first line of the passage, we understand that the author has been following the economic crisis for more than two years, i.e not less than two years.

Q. 16: Which one of the following best captures the main argument of the last paragraph of the passage?

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

Correct Answer: 3

The main idea of the last paragraph is stated in the line, “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”. Option 3 captures this idea well.

Q. 17: All of the following, if true, could be seen as supporting the arguments in the passage, EXCEPT:

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

Correct Answer: 3

The author calls the crisis “absolutely amazing story, full of human interest and drama, one whose byways of mathematics, economics, and psychology are both central to the story”. So, Option 1 is in line with the arguments in the passage.

While beginning to work on the crisis the author wrote that was extending the laws to control risky investment vehicles was essential to avoid a global financial disaster. Option 2, too, is in line with the arguments in the passage.

The author also states 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”. In other words, financial matters have become very arcane and difficult to understand. So, option 4 supports the arguments in the passage.

However, in the last paragraph, the author states that the economic crisis shows the failure of the personally and economically individualistic ideology of the Western world. So, option 3, if true, does not support the arguments in the passage.

Q. 18: According to the passage, the author is likely to be supportive of which one of the following programmes?

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

Correct Answer: 2

The author laments the fact that many bright, literate people have no idea about all sorts of economic basics. So, he is likely to be supportive of an educational curriculum that promotes developing financial literacy in the masses.

Note that option 1 is incorrect as it talks of economic “research”. There is no basis for options 3 and 4 in the passage.

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