English: Cloze Test for Upcoming Exams – Set 114

Directions: In the passage given below there are 10 blanks. Every blank has five alternative words given in options (A),(B),(C), (D) and (E). You have to tell which word is APPROPRIATE according to the context. Mark that inappropriate word as your answer. If all options are correct, Mark E as your answer.

There are many reasons why politicians like to speak about a strong dollar. A decline in the currency tends to ____1____ import prices, and thus inflation. The US has a big fiscal deficit, which it has to finance from abroad; foreigners won’t be keen on buying fixed-income securities in a declining currency. Ten-year Treasury bonds now yield 2.64%, up 15 basis points in the last month; the five-year yield is up half a percentage point in the last year. 

In the past, the dollar’s movements have often been seen as a vote of confidence in a particular president’s policies. In the late 1970s, the economic ____2____ under Jimmy Carter was followed by a rebound in Ronald Reagan’s first term (see chart). So big was the move that, in 1985, leading nations agreed the Plaza accord  to drive the dollar back down. The next dollar revival was in Bill Clinton’s second term when the technology boom made US assets highly attractive. A decline under George W. Bush was followed by a couple of rallies under Barack Obama; the first in the depths of the crisis, as investors ____3____ money from the rest of the world in favour of the perceived safety of US assets, and a steadier rise in the early years of this decade.

The current fall, under President Donald Trump, is not spectacular by historical standards. A number of factors explain the shift. First, the world economy is recovering. So investors may be moving money away from the US and into Europe and emerging markets. Second, the recent tax-cutting package passed by Congress means that the US will combine a big fiscal deficit with a trade deficit; meaning its government needs financing from abroad. Under Reagan, the US also had a “twin deficit” problem but this ____4____ the Federal Reserve to raise interest rates sharply, attracting capital into the dollar; the current Fed is pushing up rates but only slowly. Third, the ____5____ pronouncements of the current president may be discouraging foreign investment; a Pew survey last year found a dramatic slump in the image of the US as seen from abroad. As yet, one of the bullish arguments for the dollar—that American companies would ____6____ cash because of a change in the tax laws—doesn’t seem to be having any impact.

If Mr Mnuchin wanted to drive the dollar back up, what could be do? He could asked the Fed to intervene by using its reserves to back the currency, but that is unlikely. Alternatively, he could attempt to close the budget deficit but that would be a complete reversal of policy (the Tax Policy Center suggests the deficit will rise by $1.3trn over the next 10 years, thanks to the recent package). Jerome Powell, the new Fed chairman, will be far more important in determining the dollar’s ____7____ than Mr Mnuchin.

How far can the dollar fall? Our Big Mac index suggests the currency is still____8____ , although less so than six months ago. Gold, often seen as an alternative to the dollar, has been rallying in recent weeks; there are also reports that the fall in cryptocurrencies is causing investors to switch to a more traditional safe haven. 

The most likely ____9____ for a dollar rally might be some international crisis (causing a retreat from emerging markets) or a surge in inflation that ____10____ the Fed to tighten policy quicker than markets expect. Be careful what you wish for.

  1. go along
    push up
    give in
    All are correct
    Option B


  2. ability
    All are correct
    Option D


  3. yanked
    All are correct
    Option C


  4. quelled
    All are correct
    Option D


  5. variable
    All are correct
    Option C


  6. extrusion
    All are correct
    Option C


  7. along
    All are correct
    Option D


  8. hiked
    All are correct
    Option C


  9. catalysts
    All are correct
    Option A


  10. provoked
    All are correct
    Option E



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10 Thoughts to “English: Cloze Test for Upcoming Exams – Set 114”

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