IBPS EXAM Model Questions : ENGLISH LANGUAGE Set-30
Model Questions for IBPS CLERK, SO, RRB Exam : ENGLISH LANGUAGE SET-30
Directions: Read the following passage carefully and answer the
questions given below it. Certain words have been printed in bold to help
you locate them while answering come of the questions.
Goldman Sachs predicted that crute oil price would hit $200 and just as it
appeared that alternative renewable energy had a change of becoming an
economically viable option, the international price of oil fell by over 70%.
After hitting the all-time hight of $147 a barrel, a month ago, crude fell
to less than $40 a barrel. What explains this sharp decline in the
International price of oil? There has not been any major new discovery of a
hitherto unknown source of oil or gas. The short answer is that the demand
does not have to fall by a very sizeable quantity for the price of crude to
respond as it did. In the short run, the price elasticity of demand for
crude oil is very low. Conversely, in the short run, even a relatively big
change in the price of oil does not immediately lower consumption. It takes
months, or years, of high oil price to inculcate habits of energy
conservation. World crude oil price had remained at over $60 a barrel for
most of 2005-07 without making any major dent in demand.
The long answer is more complex. The economic slowdown in the US, Europe and
Asia along with dollar depreciation and commodity speculation have all had
some role in the downward descent in the international price of oil. In
recent years, the supply of oil has been rising but not enough to catch up
with the rising demand, resulting in an almost vertical escalation in its
price. The number of crude oil futures and options contracts have also
increased manifold, which has led to significant speculation in the oil
market. In comparison, the role of the Organization of Petroleum Exporting
Countries (OPEC) in fixing crude price has considerably weakened. OPEC is
often accused of operating as a cartel restricting output, thus keeping
prices artificially high. It did succeed in setting the price of crude
during the 1970s and the first half of the 80s. But, with increased futures
trading and contracts, the control of crude pricing has moved from OPEC to
banks and markets that deal with futures trading and contracts. It is true
that most oil exporting regions of world have remained politically unstable,
fuelling speculation over the price of crude. But there is little evidence
that the geopolitical uncertainties in west Asia have improved to weaken the
price of oil. Threatened by the downward slide of oil price, OPEC has, in
fact, announced its decision to curtail output.
However, most oil importers will heave a sigh of relief as they find their
oil import bills decline except for those who bought options to import oil
at prices higher than market prices.
Exporting nations on the other hand, will see their economic prosperity
slip. Relatively low price of crude is also bad news for investments in
alternative renewable energy that cannot compete with cheaper and
non-renewable sources of energy.
1. Why are oil-importing countries relieved?
(1) Price of crude reached $147, not$200, as was predicted.
(2) Discovery of oil reserves within their own territories
(3) Demand for crude has fallen sharply.
(4) There is no need for them to invest huge amounts of money in alternative
sources of energy.
(5) None of these
2. Which of the following factors is responsible for rise in speculation in crude oil markets?
(A) OPEC has not been able to restrict the oil output and control
prices.
(B) The supply of oil has been rising to match demand.
(C) Existence of large number of oil futures and oil contracts
(1) Only A
(2) Both A& B
(3) Only C
(4) All A, B & C
(5) None of these
3. What does the phrase “the price elasticity of demand for crude oil is very low” imply?
(1) When the price rises the demand for crude oil falls immediately.
(2) A small change in demand will result in a sharp change in the price of
crude.
(3) Within a short span of time the price of crude oil has fluctuated
sharply.
(4) Speculation in oil does not have much of an impact on its price.
(5) None of these
4. Which of the following is/are TRUE in the context of the passage?
(A) The decline in oil prices has benefited all countries.
(B) Renewable energy sources are costlier than non-renewable ones.
(C) Lack of availability of alternative renewable energy resulted in rise in
demand for crude.
(1) Only B
(2) Both A & B
(3) Both B&C
(4) Only C
(5) None of these
5. What has the impact of the drop in oil prices been?
(1) Exploration for natural gas resources has risen.
(2) The dollar has fallen sharply.
(3) OPEC has decided to restrict its production of oil.
(4) Economic depression in oil-importing countries
(5) Drastic fall in demand for crude oil.
