Proficiency in the English Language Test - 4

Read the passage and answer the question based on it.

Inequality is at the top of the agenda around the world. Hilary Clinton, the leading Democratic candidate to succeed Barack Obama as president of the United States, made inequality the centrepiece of a major campaign speech. Economists at the IMF too have recently released a study assessing the causes and consequences of rising inequality. Its authors reckon that while inequality could cause all sorts of problems, governments should be especially concerned about its effects on growth. They estimate that a one percentage point increase in the income share of the top 20% will drag down growth by 0.08% percentage points over five years, while a rise in the income share of the bottom 20% actually boosts growth. But how does inequality affect economic growth rates? Economists say that some inequality is needed to propel growth. Without the carrot of large financial rewards, risky entrepreneurship and innovation would grind to a halt. In 1975, an American economist, argued that societies cannot have both perfect equality and perfect efficiency, but must choose how much of one to sacrifice for the other. While most economists continue to hold that view, the recent rise in inequality has prompted a new look at its economic costs. Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education, inequality could also threaten public confidence in growth-boosting capitalist strategies like free trade.

 More recent work suggests that inequality could lead to economic or financial instability. The governor of the Reserve Bank of India argued that governments often respond to inequality by easing the flow of credit to poorer households, however, American households borrowed heavily prior to the crisis to prop up their consumption. But for this rise in household debt, consumption would have stagnated as a result of poor wage growth. Crafting a response to rising inequality is therefore tricky, he says. Some of the negative impact of inequality on growth can be blamed on poor government policies in highly unequal countries. In Latin America, for instance, populist pressure for excessive state economic control seems to shorten the average duration of growth spells. Yet in moderation, redistribution seems too benign effects-perhaps by reducing dependence on risky borrowing among poorer households. Over the past generation or two inequality has risen most in places where progressive policies, such as high top tax-rates, have been weakened. A little more redistribution now might improve the quality and quantity of economic-growth and reduce the demand for more aggressive state interventions later.

Read the passage and answer the question based on it.

Inequality is at the top of the agenda around the world. Hilary Clinton, the leading Democratic candidate to succeed Barack Obama as president of the United States, made inequality the centerpiece of a major campaign speech. Economists at the IMF to have recently released a study assessing the causes and consequences of rising inequality. Its authors reckon that while inequality could cause all sorts of problems, governments should be especially concerned about its effects on growth. They estimate that a one percentage point increase in the income share of the top 20% will drag down growth by 0.08% percentage points over five years, while a rise in the income share of the bottom 20% actually boosts growth. But how does inequality affect economic growth rates? Economists say that some inequality is needed to propel growth. Without the carrot of large financial rewards, risky entrepreneurship and innovation would grind to a halt. In 1975, an American economist argued that societies cannot have both perfect equality and perfect efficiency, but must choose how much of one to sacrifice for the other. While most economists continue to hold that view, the recent rise in inequality has prompted a new look at its economic costs. Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education, inequality could also threaten public confidence in growth-boosting capitalist strategies like free trade.

More recent work suggests that inequality could lead to economic or financial instability. The governor of the Reserve Bank of India argued that governments often respond to inequality by easing the flow of credit to poorer households, however, American households borrowed heavily prior to the crisis to prop up their consumption. But for this rise in household debt, consumption would have stagnated as a result of poor wage growth. Crafting a response to rising inequality is therefore tricky, he says. Some of the negative impacts of inequality on growth can be blamed on poor government policies in highly unequal countries. In Latin America, for instance, populist pressure for excessive state economic control seems to shorten the average duration of growth spells. Yet in moderation, redistribution seems too benign effects-perhaps by reducing dependence on risky borrowing among poorer households. Over the past generation or two inequality has risen most in places where progressive policies, such as high top tax rates, have been weakened. A little more redistribution now might improve the quality and quantity of economic growth and reduce the demand for more aggressive state interventions later.

Rearrange the following sentences (A), (B), (C), (D), (E) and (F) into a meaningful paragraph and then answer the question given below it.

A. Global investors are quaking over the prospect of a devastating stump in the world's second biggest economy.

B. A possible answer could be that the country's troubles raise doubts about whether its policymakers have the tools to keep their economy growing at a healthy place something that has been a constant reassurance for more than two decades.

C. And they are fast losing confidence that the country's policymakers, seemingly so sure-footed in the past know how to solve the problem.

D. However, such a domino effect is significant but hardly catastrophic so why the hysteria?

E. China is exporting something new to the world economy Fear?

F. Apart from the shrinking confidence, the biggest fear is that a collapsing Chinese economy would derail others around the world from emerging markets in Chile and Indonesia to industrial powers such as the United States.

Read the passage and answer the question based on it.

Inequality is at the top of the agenda around the world. Hilary Clinton, the leading Democratic candidate to succeed Barack Obama as president of the United States, made inequality the centrepiece of a major campaign speech. Economists at the IMF too have recently released a study assessing the causes and consequences of rising inequality. Its authors reckon that while inequality could cause all sorts of problems, governments should be especially concerned about its effects on growth. They estimate that a one percentage point increase in the income share of the top 20% will drag down growth by 0.08% percentage points over five years, while a rise in the income share of the bottom 20% actually boosts growth. But how does inequality affect economic growth rates? Economists say that some inequality is needed to propel growth. Without the carrot of large financial rewards, risky entrepreneurship and innovation would grind to a halt. In 1975, an American economist, argued that societies cannot have both perfect equality and perfect efficiency, but must choose how much of one to sacrifice for the other. While most economists continue to hold that view, the recent rise in inequality has prompted a new look at its economic costs. Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education, inequality could also threaten public confidence in growth-boosting capitalist strategies like free trade.

More recent work suggests that inequality could lead to economic or financial instability. The governor of the Reserve Bank of India argued that governments often respond to inequality by easing the flow of credit to poorer households, however, American households borrowed heavily prior to the crisis to prop up their consumption. But for this rise in household debt, consumption would have stagnated as a result of poor wage growth. Crafting a response to rising inequality is therefore tricky, he says. Some of the negative impact of inequality on growth can be blamed on poor government policies in highly unequal countries. In Latin America, for instance, populist pressure for excessive state economic control seems to shorten the average duration of growth spells. Yet in moderation, redistribution seems too benign effects-perhaps by reducing dependence on risky borrowing among poorer households. Over the past generation or two inequality has risen most in places where progressive policies, such as high top tax-rates, have been weakened. A little more redistribution now might improve the quality and quantity of economic-growth and reduce the demand for more aggressive state interventions later.

Read the passage and answer the question based on it.

Inequality is at the top of the agenda around the world. Hilary Clinton, the leading Democratic candidate to succeed Barack Obama as president of the United States, made inequality the centrepiece of a major campaign speech. Economists at the IMF too have recently released a study assessing the causes and consequences of rising inequality. Its authors reckon that while inequality could cause all sorts of problems, governments should be especially concerned about its effects on growth. They estimate that a one percentage point increase in the income share of the top 20% will drag down growth by 0.08% percentage points over five years, while a rise in the income share of the bottom 20% actually boosts growth. But how does inequality affect economic growth rates? Economists say that some inequality is needed to propel growth. Without the carrot of large financial rewards, risky entrepreneurship and innovation would grind to a halt. In 1975, an American economist, argued that societies cannot have both perfect equality and perfect efficiency, but must choose how much of one to sacrifice for the other. While most economists continue to hold that view, the recent rise in inequality has prompted a new look at its economic costs. Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education, inequality could also threaten public confidence in growth-boosting capitalist strategies like free trade.

More recent work suggests that inequality could lead to economic or financial instability. The governor of the Reserve Bank of India argued that governments often respond to inequality by easing the flow of credit to poorer households, however, American households borrowed heavily prior to the crisis to prop up their consumption. But for this rise in household debt, consumption would have stagnated as a result of poor wage growth. Crafting a response to rising inequality is therefore tricky, he says. Some of the negative impact of inequality on growth can be blamed on poor government policies in highly unequal countries. In Latin America, for instance, populist pressure for excessive state economic control seems to shorten the average duration of growth spells. Yet in moderation, redistribution seems too benign effects-perhaps by reducing dependence on risky borrowing among poorer households. Over the past generation or two inequality has risen most in places where progressive policies, such as high top tax-rates, have been weakened. A little more redistribution now might improve the quality and quantity of economic-growth and reduce the demand for more aggressive state interventions later.

Read the passage and answer the question based on it.

Inequality is at the top of the agenda around the world. Hilary Clinton, the leading Democratic candidate to succeed Barack Obama as president of the United States, made inequality the centerpiece of a major campaign speech. Economists at the IMF to have recently released a study assessing the causes and consequences of rising inequality. Its authors reckon that while inequality could cause all sorts of problems, governments should be especially concerned about its effects on growth. They estimate that a one percentage point increase in the income share of the top 20% will drag down growth by 0.08% percentage points over five years, while a rise in the income share of the bottom 20% actually boosts growth. But how does inequality affect economic growth rates? Economists say that some inequality is needed to propel growth. Without the carrot of large financial rewards, risky entrepreneurship and innovation would grind to a halt. In 1975, an American economist argued that societies cannot have both perfect equality and perfect efficiency, but must choose how much of one to sacrifice for the other. While most economists continue to hold that view, the recent rise in inequality has prompted a new look at its economic costs. Inequality could impair growth if those with low incomes suffer poor health and low productivity as a result, or if, as evidence suggests, the poor struggle to finance investments in education, inequality could also threaten public confidence in growth-boosting capitalist strategies like free trade.

More recent work suggests that inequality could lead to economic or financial instability. The governor of the Reserve Bank of India argued that governments often respond to inequality by easing the flow of credit to poorer households, however, American households borrowed heavily prior to the crisis to prop up their consumption. But for this rise in household debt, consumption would have stagnated as a result of poor wage growth. Crafting a response to rising inequality is therefore tricky, he says. Some of the negative impacts of inequality on growth can be blamed on poor government policies in highly unequal countries. In Latin America, for instance, populist pressure for excessive state economic control seems to shorten the average duration of growth spells. Yet in moderation, redistribution seems too benign effects-perhaps by reducing dependence on risky borrowing among poorer households. Over the past generation or two inequality has risen most in places where progressive policies, such as high top tax rates, have been weakened. A little more redistribution now might improve the quality and quantity of economic growth and reduce the demand for more aggressive state interventions later.