Reading Comprehension B2 Level

1. B2 PRACTICE

4. 1) Repealed : revoke / annul / cancel
2) Deregulation : removal of regulation / restriction
3) Sovereign wealth fund: is a state-owned investment fund comprised
of money generated by the government, often derived from a
country's surplus reserves. SWFs provide a benefit for a country’s
economy and its citizens.
4) Accrue : (of sums of money or benefits) be received by someone/a
company in regular or increasing amounts over time.
5) Ponzi Scheme : an investment fraud that pays existing investors with
funds collected from new investors. Ponzi scheme organizers often
promise to invest your money and generate high returns with little or no
risk. But in many Ponzi schemes, the fraudsters do not invest the money
6) Ascertain : find (something) out for certain; make sure of.

5. Why the Crisis Happened
After the Wall Street Crash in 1929, the US Congress passed a new law called the Glass-
Steagall Act so that history could not repeat itself. Fifty years later, Congress repealed this law
and consequently, history did repeat itself. There are two principal causes to the current global
crisis. The first is overproduction and the second is the deregulation of the financial markets,
which is, in fact, a direct result of the first cause, overproduction.
Since the Second World War, humans, in particular production engineers and economists,
have become brilliant at manufacturing on a large scale high quality goods by top brands that
people want to buy. Engineers and economists have used both robotics and the outsourcing
of production to parts of the world where the cost of labour is low. Fantastic products are
made very cheaply, sent all over the world in containers and sold at bargain prices. All this has
happened in a highly competitive environment.

6. This intense activity caused two important things to happen. The governments of
manufacturing countries like China became very rich and formed the now famous sovereign
wealth funds with the objective of investing all this lovely capital. Investing in industry was
unattractive as profit margins were very slim. Investors wanted bigger profits. Strict banking
regulations also made life very difficult for investors. Secondly, all this liquidity caused a
continued increase in the price of real estate, just like in the 1920s.
When the US Congress repealed the Glass-Steagall Act, investment banks and retail banks
were able to work together again for the first time in 50 years. Next, not to be left behind,
the European financial sector lobbied the European Union, mostly in secret, to liberate the
European market. This deregulation put an end to transparency in the banking world. Hedge
funds, whose investments are carried out under the cover of darkness, mushroomed.
Simplicity was replaced by complexity and uncertain risk. Credit default swaps gave
investors large payouts for loans gone bad and futures, which are more like bets than
investments, offered juicy returns. The world now had a stagnant real economy and a very
busy financial sector. In the USA, the financial sector accounted for 40% of the nation’s total
profits but less than 5% of the GNP.

7. Hungry investors then began speculating on the price of food commodities, especially rice
and wheat and this was when we saw the first signs of trouble. The price of wheat flour
increased more than 25% due to speculation and the Spaghetti Riots broke out in Italy. Petrol
prices increased further and further still. Farmers complained that they could not afford to
refuel their tractors and truck drivers went on strike in Spain.
On January 24 2008, the French investment bank Société Générale announced that it had lost
an astounding 7.2 billion dollars of its clients’ money from futures which went the wrong way.
Next, in the space of just 6 weeks, the price of a barrel of crude oil fell from $150 a barrel in
July to less than fifty by October. Then we found out about sub-prime loans. Investment banks
and retail banks, working together, had lent vast quantities of their clients’ money to high risk
borrowers. This means borrowers who are likely to default on their home loans or mortgages
because of low incomes and job instability. And guess what? They defaulted, handed back the
keys to the house and the banks are now left with properties that nobody wants and whose
value continues to fall. What a disaster! After that, it was the turn of the hedge funds. Many
banks, such as Grupo Santander, passed on investors’ money to hedge funds who then passed
the money on to... Bernard Madoff.

8. Governments have now spent billions of taxpayers’ money because of the mistakes made
by greedy and irresponsible bankers and The White House has said that the US deficit will
rise to $1.6 trillion in 2009. The Bank of England puts the cost of the global crisis at $2.8
trillion but nobody really knows and nobody really knows what all this means for the
future.

9. 1) In the first paragraph we learn that the Glass-Steagall Act was repealed
1. in order to regulate banks.
2. to stop overproduction.
3. because it was no longer necessary.
4. to free up financial markets.
2) Which of the following best explains why quality goods have become cheaper?
1. Quality goods are now manufactured using advanced technology and low
salaries.
2. The quality of manufactured goods has improved dramatically.
3. cheap overseas transport is now widely available.
4. production methods have improved a lot since WWII.

10. 3) In the third paragraph the writer explains that sovereign wealth funds were
interested in
1. helping their governments.
2. large profits.
3. reinvesting in industry.
4. safe investments.
4) The risks involved in an investment now became
1. transparent.
2. difficult to ascertain.
3. higher.
4. lower.

11. 5) Spanish truck drivers went on strike as a result of
1. sympathy for the farmers.
2. increased food prices.
3. riots in Italy.
4. fuel prices going up.
6) From what the text tells us about sub-prime loans, bankers can be described as
1. having great insight into financial markets.
2. skillful investors.
3. being caring about their clients' money.
4. not very intelligent.

12. 7) From the article we understand that ordinary citizens
1. are angry with their governments.
2. have to pay the bill for the banks' irresponsible behaviour.
3. now have huge debts.
4. have an uncertain future.

13. 1) Photo degrade : (of a substance or object) be decomposed by the action of
light, especially sunlight:
2) Hormone disruptors : a manmade chemical that can interfere with your
body’s hormone functioning.
3) Vinyl chloride: a colourless toxic gas used in the production of PVC and
other commercially important polymers.
4) Biodegrade : (of a substance or object) be decomposed by bacteria or
other living organisms
5) Biodegradable : (of a substance or object) capable of being decomposed by
bacteria or other living organisms and thereby avoiding pollution:
6) Unsustainable : those that we cannot sustain. ‘To sustain ‘ something
means to be able to continue it or maintain it for a decent period.
7) Inhabitants : a person or animal that lives permanently in a particular place
or region

14. Plastic Bags
Twelve years ago, oceanographer Captain Charlie Moore was skippering his yacht the
Alguita in the North Pacific. He sailed into a mass of floating plastic rubbish which took him
and his crew a week to cross. This floating rubbish dump is now called the Great Pacific
Garbage Patch and doubles the size of the USA.
The United Nations says there are now 18,000 pieces of plastic in every square kilometre of
sea everywhere in the world. A walk along any beach will give you some idea of the
seriousness of plastic pollution.
The trouble is, when we throw out plastic with the trash, the plastic doesn’t go away. Plastic
does not biodegrade. It photo degrades into smaller and smaller particles which then enter
the food chain. Plastics contain cancer-causing chemicals such as vinyl chloride which travel
along the food chain in increasing concentrations and end up in our fish and chips, along with
with hormone disruptors such as bisphenol A. Scientists try to tell us that we are killing
ourselves as well as other animals. At least 200 species are, as I speak, being killed by plastic.
Whales, dolphins, turtles and albatross confuse floating plastic, especially shopping bags and
six pack rings, with jellyfish. A dead Minke whale, washed up on a Normandy beach, was
found to have eaten plastic bags from supermarkets and had died a dreadful death.

15. 8% of all the world’s oil production is for plastic. According to the United States Environmental
Protection Agency, companies manufacture 5 billion plastic bags a year. Of all the plastic
produced annually, half is for packaging which gets thrown out with the trash a few minutes after
purchase. And 10% of all rubbish is plastic bags which take from 400 to 1000 years to degrade.
Less than one per cent of plastic bags are recycled and only 4% of all other plastic waste, the
reason being it is simply too expensive to do.
The same lobbies that work against electric vehicles and renewable energies, put governments
under pressure not to act against plastic pollution. This is because plastic represents 8% of all the
world’s oil production. These lobbies, acting on behalf of oil companies, represent an
unsustainable approach to profit. To paraphrase the Cree Indian prophecy, only when we have
wiped everything out will we realise that money cannot be eaten.
Some countries have rebelled and banned plastic bags. And the first was brave Bangladesh. Then
China took the same decision and, according to CNN Asia, saves itself 37 million barrels of oil a
year. Botswana, Canada, Israel, Kenya, Rwanda, Singapore and South Africa have also banned
plastic bags. Notice how many of the world’s richest countries are not on this list. It’s an absolute
disgrace.

16. Alright, then. If we can’t use plastic bags, how do we carry home the shopping? Take a
back pack or a folding shopping trolley. Change supermarket to one that provides
biodegradable bags, made from potato starch for example. Use consumer power.
Personally speaking, what I need to find now, is a supermarket that sells biodegradable
bin liners, otherwise I still end up using plastic. I recently spent a week in New Zealand
on honeymoon and saw that everyone was using special paper bin liners. I wish we did
something similar here in Spain.
Think globally, act locally. A small Australian town is now one step ahead of the rest of
the world. The inhabitants of Bundanoon in New South Wales have banned plastic
bottles from the town. We need to follow their example and eliminate plastic from our
lives, take care of the earth and vote for people we think will do the same.

17. 1.The writer says that we can get an idea of how much plastic rubbish
there is in the oceans
1. by looking at the sea.
2. by sailing across the Pacific.
3. by travelling across the USA.
4. by taking a walk along any beach.
2) The reader learns that toxic chemicals get into our food
1. because plastic does not biodegrade.
2. because other animals are being killed by plastic.
3. from plastic bags from supermarkets.
4. when plastic becomes small enough to enter our food chain.

18. 3) In the last sentence of the third paragraph, what does 'it' refer to?
1. plastic bags
2. money
3. recycling
4. plastic waste
4) Which of the following best explains the Cree Indian prophecy?
1. Oil companies are polluting the earth.
2. If we destroy our environment, we will destroy ourselves.
3. Money isn't food.
4. People are greedy.

19. 5) In the fifth paragraph the writer is angry because
1. not many of the world's richest countries have banned plastic bags.
2. Most of the countries are African.
3. countries aren't saving enough oil.
4. not many countries have banned plastic bags.
6) What does the reader learn about New Zealand?
1. It is a nuclear free country.
2. The supermarkets don't have plastic bags.
3. People use biodegradable bags for the rubbish.
4. The writer was on holiday there.

20. 1.In the final paragraph the writer advises us to
1. take individual action.
2. stop voting.
3. visit Australia.
4. stop buying plastic bottles.

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28. D
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