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IBPS PO Prelims Model Paper 3 with solutions

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ENGLISH LANGUAGE
Directions (1–10) : Read the following passage carefully and answer the questions given below it.
Certain words/phrases have been 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 quantitative 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 freedom 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 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 Chinese 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 Europe, where third-quarter profits are expected to be down 5.4% on the year, with revenues dropping 7.9%. So the equity 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 explains the rather bumpy ride that stock markets 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 stock markets 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.
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Total: 100
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