Part A
Directions:
Read the following four texts. Answer the questions below each text by choosing A, B, C or D. Mark your answers on ANSWER SHEET 1. (40 points)
Text 1
As a young bond trader, Buttonwood was given two pieces of advice, trading rules of thumb, if you will: that bad economic news is good news for bond markets and that every utterance dropping from the lips of Paul Volcker, the then chairman of the Federal Reserve, and the man who restored the central bank's credibility by stomping on runaway inflation, should be respected than Pope's orders. Today's traders are, of course, a more sophisticated bunch. But the advice still seems good, apart from two slight drawbacks. The first is that the well-chosen utterances from the present chairman of the Federal Reserve, Alan Greenspan, is of more than passing difficulty. The second is that, of late, good news for the economy has not seemed to upset bond investors all that much. For all the cheer that has crackled down the wires, the yield on ten-year bonds-which you would expect to rise on good economic news-is now, at 4.2%, only two-fifths of a percentage point higher than it was at the start of the year. Pretty much unmoved, in other words.
Yet the news from the economic front has been better by far than anyone could have expected. On Tuesday November 25th, revised numbers showed that America's economy grew by an annual 8.2% in the third quarter, a full percentage point more than originally thought, driven by the ever-spendthrift American consumer and, for once, corporate investment. Just about every other piece of information coming out from special sources shows the same strength. New houses are still being built at a fair clip. Exports are rising, for all the protectionist crying. Even employment, in what had been mocked as a jobless recovery, increased by 125,000 or thereabouts in September and October. Rising corporate profits, low credit spreads and the biggest-ever rally in the junk-bond market do not, on the face of it, suggest anything other than a deep and long-lasting recovery. Yet Treasury-bond yields have fallen.
If the rosy economic backdrop makes this odd, making it doubly odd is an apparent absence of foreign demand. Foreign buyers of Treasuries, especially Asian certral banks, who had been swallowing American government debt like there was no tomorrow, seem to have had second thoughts lately. In September, according to the latest available figures, foreigners bought only $5 6 billion of Treasuries, compared with $25.1 billion the previous month and an average of $38.7 billion in the preceding four months. In an effort to keep a lid on the yen's rise, the Japanese central bank is still busy buying dollars and parking the money in government debt. Just about everyboby else seems to have been selling.
1. The advice for Buttonwood suggests that _____.
［A］ Paul Volcker enjoyed making comments on controlling inflation
［B］ the Federal Reserve has an all-capable power over inflation control
［C］ economy has the greatest influence upon the daily life of ordinary people
［D］ the economic sphere and bond markets are indicative of each other
2. The word "passing"(Line 7, Paragraph 1) most probably means_____.
［A］ instant ［B］ trivial ［C］ simple ［D］ negligible
3. Which of the following is responsible for the rapid economic growth in the US?
［A］ Domestic consumers. ［B］ Foreign investments.
［C］ Real estate market. ［D］ Recovering bond market.
4. According to the last paragraph, most Asian central banks are becoming _____.
［A］ rather regretful ［B］ less ambitious
［C］ more cautious ［D］ speculative
5. The phrase "keep a lid on"(Line 6, Paragraph 3) most probably means_____.
［A］ put an end to ［B］ set a limit on
［C］ tighten the control over ［D］ reduce the speed of