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UK



Reading Tests



Contents:

1. Brexit: The path to Brexit
2. The Financial Crash: The cause of the 2008 Financial Crisis
3. Gig Economy: The Gig Economy
4. CSR: Corporate Social Responsibility
5. Globalisation: International Trade



Levels: ***** B2/C1 ***** C1




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Student
Time: Approximately 1hour

Two types of lesson

Lesson#1: [Easy] ***** [B2/C1]
1. Try to predict the content of text / write down key terms / ideas
2. Read text – check words and meanings with a dictionary
3. Answer questions
4. Check answers (pass mark is 70%)

Lesson #2: [Hard] ***** [C1]
1. Read text – no dictionary
2. Answer questions
3. Check answers (pass mark is 70%)

Teacher

Two types of lesson

Lesson#1: [easy] ***** [B2/C1]
1. Give out text a week before the test – students read, check vocabulary and meaning.
2. Test day – give out a new copy of text and the questions (no dictionary or notes)
3. Set 1 hour to read text and answer the questions
4. Take in and correct or go through answers in class (pass mark is 70%)
5. Extra activity – students write the summary* (add 30 minutes to test)

Lesson #2: [hard] ***** [C1]
1. Test day – give out text and questions
2. Set 1 hour to read text and answer the questions
3. Take in and correct or go through answers in class (pass mark is 70%)
5. Extra activity – students write the summary* (add 30 minutes to test)




Summary writing
Link: www.academic-englishuk/summary

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UK

Brexit: The path to Brexit

Reading Test















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The Path to Brexit
C. Wilson (2017)

1) The European Union was formed in the 1950s, specifically under the 1957 Treaty of Rome that
implemented the single market for goods, labour, services and capital with common policies on
transport and agriculture and to incorporate the creation of the European Social fund and
commission. In these early stages it was termed the European Economic Commission (EEC) and was
derived of six member states; Germany, France, Italy, Belgium, the Netherlands and Luxembourg.
The UK declined an invitation to join. Nevertheless, twenty-two years later the UK was granted
accession in 1973 and forty-three years later the UK has voted to leave.

2) Since joining the EU back in 1973 there has been significant progress in terms of regulation and
policy. The first being ‘the Schengen Treaty’ in 1985. This treaty ratified a borderless zone across
member states to include common visa policies and the abolishment of passport controls. The UK
refused to sign up to this agreement. The second was ‘the Maastricht Treaty’ in 1992. This changed
the name from EEC to the EU and introduced the single currency of the Euro through the creation of
the European Central Bank (ECB) to create a second reserve currency in the world and solely control
EU monetary policy to maintain stability. It also developed a better coordination of economic
policies and the implementation of European Citizenship. The final development was the Lisbon
Treaty in 2007. This improved past treaties but also extended powers of judicial matters and
European Parliament.

3) At the moment in 2017, the EU consists of 28 states who operate through a single market with
standardised laws and EU policies aimed at ensuring the four freedoms of the free movement of
goods, services, capital and people with common policies on trade, agriculture, fisheries and
regional development. The EU is the second largest economy in the world with a combined GDP of
$20.75 trillion, 20% of the global gross domestic product and 30% of the net global wealth of $223
trillion. The EU is the largest exporter in the world and since 2008 is the largest importer of goods
and services. Internal trade is aided by the removal of tariffs and reduced border control. According
to the Office of National Statistics (2016), the UK pays on average £18bn a year for membership, this
equates to £350million a week. In 2016, the UK received a rebate of £5bn and the EU spent £4.5bn
on the UK, therefore the UK’s net contribution is about £8.5bn a year. These costs seem exuberant
and the true benefits are difficult to calculate against investment. On the one hand, the UK
Government (2016) claims that EU benefits provide 4-5% of UK GDP or £62-78bn a year with the
single market increasing flows of investment and the free movement of people benefits recruitment
and knowledge transfer skills. On the other hand, without EU membership the future is unclear but
not necessarily negative due to the fact that this could be a new horizon opening better trade
markets outside a controlled single market and investing solely in the UK.

4) The UK and its relationship with the EU has been a turbulent affair (Young & Gee, 2016) from the
start and there have been numerous calls for referendums. These began just after the accession in
1975 when a referendum to leave was called on the disagreement with the EEC’s agricultural
policies and budget financing, then again in 1983 when Margret Thatcher famously negotiated a
rebate from being the net contributor to the EU funds. Following that in 1992, the UK suspended its
membership over the introduction of the Euro and the exchange rate mechanism. In 2011, the UK
prevented the EU Government plans to levy banks and restrict London’s financial sector. In 2013,
David Cameron tried to renegotiate the UK’s membership and have greater power of immigration,
exclusion from Eurozone bailouts and prevent the EU’s commitment of ‘an ever closer union’, which
the UK sees as a creation of a super-state Europe controlled by one type of political union. However,
the negotiations were not fully met and a referendum was proposed. Finally, in 2016, trouble in the

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Eurozone and the ongoing migrant crisis led to the referendum being called for the 23th June 2016.
The controlling government ‘the conservatives’ were divided with the Prime Minister ‘David
Cameron’ supporting remain and two of his leading politicians supporting leave.

5) On Thursday 23rd June Britain voted to leave the EU with 51.9% leave and 48.1% remain overall.
However, Scotland and Northern Ireland had a majority vote of remain with 62/38 and 55/44
respectively. According to Official Government figures (2016), 34 million people voted equating to a
72% turnout, which was the highest ever turnout in the history of voting. The referendum results
suggest the UK is split down the middle in its opinion on the EU. The main arguments for the leave
campaign were to regain sovereignty, to cut immigration, to remove restrictions of the single
market to access global markets and to spend £350 million a week on the UK economy. Economists
have analysed the results and found a correlation between the people who voted to leave being a
specific social grade (manual, casual workers), non-graduate level of education and the over 60s
(pensioners). Also, the main areas that voted leave were places with high numbers of immigrants,
high unemployment and deprivation from lack of Government funding (mainly the North of
England). London on the other hand voted overwhelmingly to remain in the EU (59.9%), which some
Economists suggest is because of multicultural areas, a younger population and highly educated
residents.

6) The referendum vote was to leave so ‘Brexit means Brexit’. Since the vote there has been a
change in Prime Minister and a complete pro-Brexit cabinet reshuffle to accommodate the new
changes. The Government has triggered ‘Article 50’ of the treaty of Lisbon in March 2017. Triggering
Article 50, is the formal notification of the intention to withdraw the UK from the EU and the UK has
two years to leave from that date. At the same time, all the treaties that govern membership no
longer apply to Britain. The terms of exit will be negotiated between Britain’s 27 counterparts. The
Government has two main choices a ‘hard’ or ‘soft’ Brexit. A hard Brexit means to give up full access
to the single market, go back to WTO rules for trade and gain full control of borders and laws. And a
soft Brexit means keep a similar close relationship with the EU similar to existing arrangements with
free access to the Single market, bank passporting rights but no seat on EU commission, and this
deal must include the four freedoms. Whatever the choice, it is now becoming increasingly evident
that the short-term impact is likely to be negative with uncertainties over trade arrangements
already affecting the pound sterling. The Bank of England has stated that Brexit is the biggest risk to
financial stability in history. However, the main point is that no one actually knows exactly what will
happen concerning the implications of Brexit on economic prosperity and the UK’s role on the
international stage.

References:

The UK Government. (2016). European Union Referendum 2016: Briefing Paper No:CBP 7639. [online] House of
Commons. Available at: http://researchbriefings.files.parliament.uk/documents/CBP-7639/CBP-7639.pdf
[Accessed 10 Jan. 2017].

ONS, (2016). The UK's EU membership fee. [online] Office of National Statistics. Available at:
https://fullfact.org/economy/our-eu-membership-fee-55-million/ [Accessed 10 Jan. 2017].

Young, A and Gee, G, (2016). Regaining Sovereignty, Brexit, the UK Parliament and the Common Law.
European Public Law, 22 (1), 131-147.

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Comprehension questions

1. Headings – match a subtitle for each paragraph
1 B Background history A Dissatisfaction with EU policy
2 B Background history
3 C The way forward
4 D Three key treaties
5 E An analysis of the referendum
6 F EU Economics
____ / 5
2. True / false / not given (T / F/ NG)
i. The UK refused to be a member in the 1950’s because of the treaty of Rome
ii. The UK refused to sign two treaties
iii. The UK receives nothing for its net investment of £8.5bn
iv. The Eurozone crisis was the main reason for the referendum
v. The main reason for the leave vote was from people who felt disadvantaged
vi. Hard Brexit is the better solution
____ / 6
3.Open questions
i. What are the four freedoms?
1____________________ 2) ____________________ 3) ____________________ 4) ____________________
___ / 4
ii. What are the key points of each treaty? (fill in box below)
‘the Schengen Treaty’ ii)
‘the Maastricht Treaty’ iii)
‘the Lisbon Treaty’ iv)
____ / 3
4. EU figures - (fill in box below from paragraph 3 – what do the numbers connect to?)
$20.75 trillion i)
20% ii)
30% iii)
£18bn iv)
£350m v)
£62-78bn vi)
____ / 6
5. Dates: UK disagreements with EU – (fill in box below from paragraph 4 – topics of conflict)
1975 i)
1983 ii)
1992 iii)
2011 iv)
2013 v)
2016 vi)
____ / 6

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6. Reasons: Key reasons why people voted leave - (fill in box below – 4 key reasons)
1
2
3
4
____ / 4
7. Types of people: Who were the main people who voted leave?
1
2
3
____ / 3
8. Definition: What is Article 50?


____ / 2
9. Key language – explain these terms from the context / synonyms where appropriate

Accession Ex. Acquisition / to be added

i. Ratified
ii. Judicial matters
iii. Regional development
iv. Tariffs
v. A rebate
vi. Exuberant
vii. Turbulent
viii. To levy
ix. A bailout
x. Migrant crisis
xi. Sovereignty
xii. Deprivation
xiii. A cabinet reshuffle
xiv. To trigger
xv. Passporting
____ / 15


Overall Score: ___ / 54

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Comprehension Questions ANSWERS

1. Headings – match a subtitle for each paragraph

1 B Background history A Dissatisfaction with EU policy
2 D Three key treaties B Background history
3 F EU Economics C The way forward
4 A Dissatisfaction with EU policy D Three key treaties
5 E An analysis of the referendum E An analysis of the referendum
6 C The way forward F EU Economics

2. True / false / not given
i. The UK refused to be a member in the 1950’s of the treaty of Rome NG
ii. The UK refused to sign two treaties T
iii. The UK receives nothing for its net investment of £8.5bn (hard to calculate) F
iv. The Eurozone crisis was the main reason for the referendum (migrant crisis) F
v. The main reason for the leave vote was from people who felt disadvantaged T
vi. Hard Brexit is the better solution NG

3. Open questions
i. What are the four freedoms? goods, labour, services and capital
ii. What are the key points of each treaty? (fill in box below)

the ‘Schengen Treaty’ i. 1985 borderless zone /no passport controls. UK refused to sign
the ‘Maastricht Treaty’ ii.1992. EEC to EU /single currency /ECB/ European Citizenship.
The’ Lisbon Treaty’ iii) 2007. judicial matters and European Parliament.

4. EU figures - (fill in box below from paragraph 3 – what do the numbers connect to?)
$20.75 trillion i) EU GDP
20% ii) Of Global GDP
30% iii) Net Global wealth
£18bn iv) A year UK membership
£350m v) UK membership a week
£62-78bn vi) UK Government EU membership benefit

5. Dates: UK disagreements with EU – (fill in box below from paragraph 4 – topics of conflict)
1975 i. Agriculture policy and budget financing
1983 ii. Rebate for being Net contributor
1992 iii. Euro and exchange rate mechanism
2011 iv. Levy banks & restrict Financial
2013 v. Eurozone bail outs / super-state Europe
2016 vi. Trouble in Eurozone / migrant crisis

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6. Reasons: Key reasons why people voted leave - (fill in box below – 4 key reasons)

1 Sovereignty
2 Immigration too high
3 Single market prevents global trade
4 Spend EU membership just on UK

7. Types of people: Who were the main people who voted leave?

1 Manual casual workers
2 Non-graduate level educated
3 pensioners

8. Definition: What is Article 50?
Part of the Treaty of Lisbon: formal notification to leave the EU. Takes 2 years.

9. Key language – explain these terms from the context / use synonyms where appropriate)
Accession Acquisition / to be added
i. Ratified Making it officially valid
ii. Judicial matters Appropriate to a law of court
iii. Regional development Aid and help to poorer areas in a country
iv. Tariffs A tax or duty to be paid on exports or imports
v. A rebate A refund of money
vi. Exuberant Very high
vii. Turbulent Conflict not calm
viii. To levy Impose a tax or fine
ix. A bailout Give financial assistance
x. Migrant crisis Too many migrants
xi. Deprivation Lack of basic amenities
xii. A cabinet reshuffle To change politician’s job roles in a government
xiii. Passporting The right to financially trade freely in other countries with
having a headquarters / a company in that country

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UK

The Causes of the Financial Crisis 2008

Reading Test














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The Causes of the 2008 Financial Crisis
C. Wilson [2017]

1) In 2008 the world experienced the worst financial crisis since the Great Depression
(1930s). The severe magnitude of the financial disaster became fully evident towards the end
of 2007. It had, however, begun years earlier through what many claimed to be the main factor in
the crash; sub-prime mortgage lending. The financial crisis of 2007-08 and the aftershocks of the US
subprime mortgage crisis of 2007-09 is now considered to be 'The Great Recession'. The US Financial
Crisis Inquiry Commission [FCIC] (2011) reported the crisis was avoidable and was caused from
widespread failures in regulation of financial institutions and the reckless actions in risk and
borrowing. It concluded that key governmental policy makers were ill-prepared and lacked
understanding and accountability in the financial systems they oversaw. This article will examine
how subprime mortgage lending led to the Great Recession.

2) Towards the end of the 1990s property purchases began to rise. With such growth, lending money
for house buying became a profitable business in both mortgages and remortgaging. Traditionally,
the house buyer saves up a deposit (down payment – usually between 10% of the house cost) and
contacts a bank or mortgage broker, who connects them to a lender, who in turn provides a
mortgage based on the grounds of specific criteria (permanent employment, no previous financial
defaults (a positive credit-score), and the repayment plan being achievable). This is characterized as
a ‘Prime-mortgage’ and the level of risk in lending is extremely low.

3) Throughout 2000 as home ownership became more popular and house prices rose significantly
(1997 – 2006 house prices rose by 124% in the US and 186% in the UK (US Spindices, 2016)), lenders
began to securitise these mortgages into mortgage-backed securities (MBS) and Collateralized Debt
Obligations (CDOs) and then sold them to the investment banking sector. These mortgages were
rated by credit agencies into three areas, ‘safe’, ‘ok’ and ‘risky’, and then sold on to the Shadow
Banking Sector or investors, non- depository bankers, and hedge funds respectively. However,
the prime mortgage market began to become saturated due to those who qualified had one.

4) Therefore, sub-prime mortgage lending was introduced in 2002/3 based on the presumption that
as house prices continued to rise, if a borrower defaulted on payment, the lender would reprocess
the house as equity. Lenders began to add risk to these new mortgages in that no deposit, no proof
of income, or no documents were required to obtain a mortgage. An estimated $3.2 trillion loans
were issued to homeowners with bad credit and undocumented incomes between 2002-2007 (FCIC,
2011), and with such a rise deregulation of banking policy occurred to include fraudulent automated
underwriting processes and credit agencies' standards falling. At the same time 'predatory lending'
offered loans at low interest rates or Adjustable Rate Mortgage (ARM) rates, where the consumer
was unaware of the contract and associated rates (Krugman, 2009). The sub-prime mortgage
process actively encouraged a rise in house prices and a phenomenon known as the 'housing
bubble', where house prices rose much faster than wages making housing unaffordable or people
borrowing more than they can repay.

5) The shadow banking sector of Investment bankers, hedge funds and insurance firms all bought
into the highly profitable world of sub-prime mortgage backed securities. These highly profitable
credit instruments (CDOs), were traded internationally through derivatives and foreign exchange
trading and spread across the global financial community. By 2006, 80% of U.S mortgages were
subprime loans with an estimated value of $1.4 trillion (FCIC, 2011) Shadow banking often referred
to as parallel banking, were not subjected to the same banking regulatory controls. These
institutions were vulnerable as they borrowed short-term in liquid markets to purchase long term,

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illiquid and risky assets. This meant disruptions in credit markets creating rapid deleveraging, selling
long term assets at depressed prices.

6) Interest rates began to rise in 2007, and this was the beginning of the end. The default rates
began to increase with many borrowers unable to meet the monthly payments and this in turn
meant that MBS and CDOs began to lose value with higher default rates. Concurrently, the housing
bubble burst and house prices fell 40% (FCIC, 2011), leaving many people in negative equity.
However, the most serious effect was a crisis of liquidity and trust that occurred across
banks. Lehman Brothers went bankrupt and many more (Merrill Lynch, AIG, Freddie Mac, Fannie
Mae, HBOS, Royal Bank of Scotland, Bradford & Bingley, Fortis, Hypo and Alliance & Leicester) were
on the verge of bankruptcy and needed to be bailed out by Governments. In fact, 21 Banks and 61
hedge funds had been forced to declare bankruptcy in the US alone (Morris & Song, 2008). The
remaining banks rose interest rates and stopped lending money which became known as the 'Credit
Crunch' and the led the world into ‘The Great Recession’.

7) Since 2008, a number of measures have been created in response to rectify the problems. These
include financial rescue plans, central bank’s monetary policies of lowering interest rates, and
Governmental public stimulus packages. There are calls for improved market regulation and
supervision, which have been met through the Dodd Frank Act (Krugman, 2009). This was the largest
reform of the U.S banking sector since WW2. In addition, a new global financial system regulated by
the IMF, who should have a broader role in the regulatory system of the world economy, is being
implemented.

8) Overall, the financial crisis of 2008 was not just the sub-prime mortgage lending sector. There are
a number of other contributing factors that this article has not discussed, but primarily fraudulent
greedy banking practice seems to lie at the heart of it. To identify who is exactly to blame is
incredibly difficult because the results of toxic assets from fraudulent underwriting processes, easy
credit conditions, predatory lending, deregulation and over-leveraging all had a significant effect on
creating one of the biggest crashes of all time. It seems that everyone was responsible, from
government’s inability to regulate innovative banking practice, Economists unable to forecast
economic collapse, financial institutions exploiting the complexity of MBS and CDOs and even
homeowners taking on loans they were unable to pay back. The questions that exist, however, are
whether it will happen again and are the measures in place sufficient to control and regulate
banking practice.
[1003 words]
Reference List

Krugman, P. 2009). The Return of Depression Economics and the Crisis of 2008. W.W. Norton Company Limited.

Morris, S. and Song H, S. (2009). Financial Regulation in a System Context. Brookings Papers on Economic
Activity, 2008(2), pp.229-274. Available at: http://www.princeton.edu/~smorris/pdfs/Morris-
FinancialRegulationinaSystemContext.pdf [Accessed 24 Dec. 2016].

The financial crisis inquiry report [FCIR]: final report of the National Commission on the Causes of the Financial
and Economic Crisis in the United States. (2011). Choice Reviews Online, [online] 48(12), pp.48-7034. Available
at: http://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_full.pdf. [Accessed 24 Dec.
2016].

Us.spindices.com. (2016). S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index - S&P Dow Jones
Indices. [online] Available at: https://us.spindices.com/indices/real-estate/sp-corelogic-case-shiller-us-
national-home-price-nsa-index [Accessed 24 Dec. 2016].

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Comprehension Questions

1. Headings – choose a subtitle for each paragraph
1 B Background history A Profitable Trading
2 B Background history
3 C Sub-prime mortgage
4 D Conclusion
5 E A Prime mortgage
6 F A new regulatory system
7 G Mortgage securitisation
8 D Conclusion H The collapse
___ / 6
2. True / False / Not Given – one question per paragraph T/F/NG
vii. The financial crisis began in 2007
viii. Prime-mortgages are high-risk
ix. In 2000, mortgages were packaged and made into marketable products
x. Credit Agencies were unqualified in underwriting processes
xi. Shadow Banking sector is the main reason for the financial crisis
xii. The government had to take over banks to save them from bankruptcy
xiii. The rescue packages have worked in regulating the banking sector
xiv. The subprime mortgage sector was the main reason for the financial crisis
___ / 8
3. Data - fill in box below– what do the numbers connect to?
10% i)
186% ii)
3.2 iii)
80% iv)
1.4 v)
40% vi)
___ / 6
4. Acronyms: write the words for these acronyms
FCIC
MBS
CDO
ARM
___ / 4

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Paragraph 1
5. What were the main causes of the crisis according to the FCIC? (2 key reasons)
1
2
___ / 2
Paragraph 2
6. Three key criteria for a traditional mortgage.
1
2
3
___ / 3
Paragraph 3/4
7. Why did the sub-prime mortgage sector lending rise?
1
2
___ / 2
Paragraph 4
8. What is ‘predatory’ lending?

___ / 1
Paragraph 5
9. How is shadow banking different from traditional banking?

___ / 1
Paragraph 6
10. What was the most serious effect of the financial crisis to the banks?

___ / 1
Paragraph 7
11. What are the two measures being put in place after 2008?
1
2
___ / 2
Conclusion
12. What were the key problems associated with toxic assets?
i
ii.
iii.
iv.
v.
___ / 5

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Conclusion
13. The overall key problems with these groups were:
Governments i. inability to regulate innovative banking practice

Economists ii.

Financial institutions iii.

Homeowners iv.

___ / 3
14. Key language – explain these terms from the context / use synonyms (where appropriate)
magnitude A great size / immense / vast

xiv. Defaults

xv. Saturated

xvi. Parallel

xvii. Fraudulent

xviii. ‘housing bubble’

xix. Negative equity

xx. Bail out

xxi. The ‘credit crunch’.

xxii. To rectify

xxiii. stimulus packages

xxiv. toxic assets

___ / 11

Overall Score: ____ / 55

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Comprehension Questions ANSWERS

1. Headings – write a subtitle for each paragraph
1 B Background history
2 E A Prime mortgage
3 G Mortgage securitization
4 C Sub-prime mortgage
5 A Profitable Trading
6 H The collapse
7 F A new regulatory system
8 D Conclusion

___ / 6
2. True / false / not given – one question per paragraph
i. The financial crisis began in 2007 [P1: begun years earlier] F
ii. Prime-mortgages are high-risk [P2: low risk] F
iii. In 2000, mortgages were packaged and made into marketable products T
iv. Credit Agencies were unqualified in underwriting processes NG
v. Shadow Banking sector is the main reason for the financial crisis NG
vi. The government had to take over banks to save them from bankruptcy T
vii. The rescue packages have worked in regulating the banking sector NG
viii. The subprime mortgage sector was the main reason for the financial crisis F
[P8: There are a number of other contributing factors ]
___ / 8
3. Data - (fill in box below– what do the numbers connect to?)
10% i) deposit
186% ii) UK house price rise in UK 1997 - 2006
3.2 iii) $3.2 trillion bad credit loans issued (2002 – 2007)
80% iv) the total of US subprime loans
1.4 v) $1.4trillion value on sub-prime mortgages
40% vi) house price fell in 2007
___ / 6

4. Acronyms: write the words for these

FCIC i) Financial Crisis Inquiry Commission
MBS ii) Mortgage-Backed Securities
CDOs iii) Collateralized Debt Obligations
ARM iv) Adjustable Rate Mortgage
___ / 4

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5. What were the main causes of the crisis according to the FCIC? (2 key reasons)
1 widespread failures in regulation of financial institutions
2 reckless actions in risk and borrowing
___ / 2

6. Three key criteria for a traditional mortgage.

1 Permanent employment
2 A positive credit-score
3 Achievable repayment plan
___ / 3

7. Why did the sub-prime mortgage sector lending rise

1 Saturated due to those who qualified for a mortgage had one.
2 House price rise meant house as equity
___ / 2

8. What is ‘predatory’ lending?

lending' offered loans at low interest rates or Adjustable Rate Mortgage (ARM) rates,
where the consumer was unaware of the contract and associated rates. [key terms]
___ / 1

9. How is shadow banking different from traditional banking?

Not banking regulatory controls, these institutions were vulnerable as they borrowed
short-term in liquid markets to purchase long term, illiquid and risky assets [key terms]
___ / 1

10. What was the most serious effect of the financial crisis to the banks?
The crisis of liquidity and trust that occurred across banks.

___ / 1

11. What are the two measures being put in place after 2008?
1 the Dodd Frank Act
2 a new global financial system regulated by the IMF
___ / 1

12. Conclusion: What were the key problems associated with toxic assets?
i fraudulent underwriting processes
ii. easy credit conditions
iii. predatory lending
iv. deregulation
v. over-leveraging ___ / 5

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14. The overall key problems with these groups were:

Governments i. government’s inability to regulate innovative banking practice,

Economists ii. unable to forecast economic collapse

Financial institutions iii. exploiting the complexity of MBS and CDOs / homeowners
taking on loans they were unable to pay back
Homeowners iV. taking on loans they were unable to pay back

___ / 3
15. Key language – explain these terms from the context / use synonyms where appropriate)
i. magnitude A great size / immense / vast

ii. Defaults Anon payment of money owed

iii. Saturated Supply beyond demand

iv. Parallel Occurring or existing at the same time

v. Fraudulent Dishonest. Corrupt, deceitful

vi. ‘housing bubble’ where house price rise much faster than wages making
housing unaffordable
vii. Negative equity Property value falls below the mortgage value

viii. Bail out To give financial assistance

ix. The ‘credit crunch’. Banks stop lending money

x. To rectify Put right or correct

xi. stimulus packages A package of economic measures to stimulate a floundering
economy
xii. toxic assets A bad financial asset whose value has fallen and no longer a
functioning market
___ / 11

Overall Score: _____ / 55

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UK

The Gig Economy

Reading Test














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The Gig Economy
C. Wilson (2017)

1) The working world is changing. In our increasing flexible labour market, the notion of a
‘job for life’ and the concept of 9-5 workday is diminishing. In its place is the gig economy,
which are collaborative working platforms where people work on temporary contracts
(gigs), often as freelancers and self-employed. Recent research from Oxford University
(2016) suggests that this labour market has grown 25%, with predicted growth of up to 40%
by 2020, and is occupied by 30% of the UK’s population working on short-term temporary
projects. This significant growth is attributed to digitalization, increased financial pressures
and the increased frequency of people changing jobs (The Recruitment & Employment
Confederation (REC), 2016).

2) Defining the Gig Economy is incredibly difficult because of how diverse the labour market
is. World leading research from the Mckinsey Report (2016) defines it as ‘independent work
that encapsulates autonomy, payment for the task or assignment or sales and a short-term
relationship between the worker’. This includes people who provide labour services as well
as those who trade in goods or rent assets. The McKinsey Report also defines workers into
four bands: Free Agents, Casual Earners, Reluctants and Financially Strapped. Vaughan and
Daverio (2016) separate the gig economy into five key sectors: peer to peer
accommodation, peer-to-peer transportation, on demand household services, on demand
professional services and collaborative finance. Overall, these economies are independent
temporary short-term positions that include a form of collaborative consumption and are
often operated through a digital platform. This article will use the ‘gig economy’ as an
umbrella term to include all of the above.

3) There are 275 collaborative economy platforms in the EU creating an estimated €25bn
annually (Vaughan and Daverio, 2016). Key leaders in peer-to-peer accommodation are
companies like Airbnb. This platform allows individuals to rent out a spare room or an entire
house to travellers. The main driver is the creation of extra income for the supplier but also
creating an authentic experience and cheaper accommodation for the traveller. Peer-to-
peer transportation is Uber who provide ‘a taxi style’ service through their Uber app. Clients
submit a trip request and the app links them to the nearest Uber ‘gig’ driver. A popular on-
demand household service is the company Deliveroo, who are an online food delivery
service company through which customers order food from local restaurants advertised on
the Deliveroo platform. The food is then collected and delivered by gig employees within 30
minutes. On demand professional services are companies like peopleperhour.com or
freelancer.com. These platforms advertise and organize top professionals. Workers
showcase their portfolios, recent work and trusted reviews so that employers can choose
appropriately. Finally, collaborative finance is commonly termed as ‘crowd-funding’ these
offer individuals and businesses opportunities to invest, lend and borrow directly between
each other. The gig economy is quickly becoming a vital component of the UK labour
market for a range of sectors and industries (REC, 2016).

4) The transformative impact of the gig economy is having veritable economic benefits by
raising labour force participation, stimulating consumption, and boosting productivity

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(McKinsey Report 2016). It is meeting the growing demand for services from consumers and
organisations and has the potential for considerable growth and development over the next
20 years (REC, 2016). Research seems to suggest that the gig economy offers a better work-
life balance through autonomy and flexibility. In addition, businesses are benefitting from
having access to a global talent pool, reduction in operational costs and lowering the risks of
long-term employment contracts.

5) Such a rapid growth of the gig economy is posing profound challenges for policy makers
and regulators. There are already significant differences in regulatory frameworks in tax
policies, applications and enforcement across Europe (Vaughan and Daverio, 2016: 3). REC
(2016) claims that workers are not protected by common workers’ rights laws, do not
qualify for sick, holiday or pension entitlements, and they can be forced to work at lower
rates with no job security or continuity. With regards to employers, REC (2016) states that
gig workers may not be loyal to the company’s brand, there is also the possibility that crowd
sourcing profiles are deceptive or exaggerated, and with little regulatory control of gig
employees, companies may become embroiled in legal disputes over worker’s rights.
Overall, it seems that the gig economy has a number of challenges to be addressed.

6) The commodisation of the labour market has created short fixed working contracts, and
limited job security, and lifetime employment with one company is now a relic of the past.
Digital technologies are changing work patterns and offering greater opportunities. It seems
no surprise that participation in the collaborative economy is highest among the well-
educated under 35 age range (Vaughan and Daverio, 2016), thus suggesting this is going to
be the future of employment. The biggest challenge for the gig economy is regulation and
control. Research is key in enabling policy-makers to modernize classifications of work
patterns, tax filing and compliance require improvements. It is imperative that this research
improves regulation offering protection for low-skilled, low-paid gig workers with better
working rights, acknowledging disability and discrimination laws and also controlling
minimum wages. Overall, ‘regulating the gig economy is about allowing innovation to
flourish but making sure the advantages are well-distributed’ (REC, 2016: 56).
[Words: 860]

References
The Mckinsey Report (2016) Independent Work: choice, necessity and the gig economy (October
2016). Mckinsey Global Institute Publications.

The Recruitment & Employment Confederation (2016) Gig Economy: The Uberisation of Work.
Institute of Recruitment Professionals publishing.

The University of Oxford (2016) Rise of Online Work Captured in the First Online Labour Index.
Available at: http://www.ox.ac.uk/news/2016-09-21-rise-online-work-captured-first-online-labour-
index [Accessed 03 February 2016)

Vaughan, R. & Daverio, R. (2016) Assessing the Size and Presence of the Collaborative Economy in
Europe. PWC- European Commission Paper (DG GROW).

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Comprehension Questions

1. Headings – choose a subtitle for each paragraph
1 B The rise of the gig economy A Principal gig companies
2 B The rise of the gig economy
3 C The importance of the gig economy
4 D A complex definition
5 E Future challenges
6 F The limitations of the gig economy
___ / 5
2. True / False / Not Given – one question per paragraph T/F/NG
xv. People who work for the Gig Economy are self-employed.
xvi. Defining is difficult because of the different types of workers.
xvii. On demand services like Peopleperhour and freelancer are the most popular.
xviii. The majority of gig workers are satisfied with the flexibility.
xix. Some crowd-sourcing profiles are lying.
xx. More research is necessary to offer better protection.
___ / 6
Open answer questions

Paragraph 1
3. What is Oxford University forecasting?
1
___ / 1
Paragraph 1
4. What are the main reasons for the increase of the gig economy?
1
2
3
___ / 3
Paragraph 2
5. What are the main differences between the two definitions.
1

2

___ / 2

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Paragraph 3
6. What are the five key companies given as examples?
1
2
3
4
5
___ / 5
Paragraph 4
7. What are the key benefits?
Economic 1. Labour force participation
2.
3.

Individuals 1.
2.
3.

Business 1. Global talent pool
2.
3.
___ / 7
Paragraph 5
8. What are the key problems?
Policy makers Differences in regulatory frameworks such as…
1. Tax policies
2.
3.

Workers 1. Not protected by workers’ rights
2.
3.
4.
5.

Employers 1.
2.
3.
___ / 9

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Paragraph 6
9. What is the main evidence that the Gig economy is here to stay?


___ / 1
Paragraph 6
10. What are the most important issues to be addressed?


___ / 2
Paragraph 6
11. What four aspects should regulation focus on?
1
2
3
4
___ / 4
12. Author’s stance?
Is the author for or against the Gig economy? Why?
For Against [choose one]
Why?



___ / 2
13. Reference words – explain what these reference words connect to: (underlined in the text)

Paragraph Word Connection

1 This 25% growth

2 those

3 these

4 It

5 they

6 this

___ / 5

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14. Key language – explain these terms from the context / use synonyms where appropriate)

Paragraph Word Explanation

1 notion A belief / conception

2 encapsulates

2 financially strapped

2 an umbrella term

3 authentic experience

3 To showcase

4 veritable

4 stimulating

4 autonomy

5 deceptive

5 embroiled

6 ‘a relic of the past’

6 to flourish

___ / 12

Overall Total: ____ / 64

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Comprehension Questions ANSWERS

1. Headings – choose a subtitle for each paragraph
1 B The rise of the gig economy A Principal gig companies
2 D A complex definition B The rise of the gig economy
3 A Principal gig companies C The importance of the gig economy
4 C The importance of the gig economy D A complex definition
5 F The limitations of the gig economy E Future challenges
6 E Future challenges F The limitations of the gig economy
___ / 6
2. True / False / Not Given – one question per paragraph T/F/NG
i. People who work for the Gig Economy are self-employed. T
ii. Defining is difficult because of the different types of workers. [markets] F
iii. On demand services like Peopleperhour and freelancer are the most popular. NG
iv. The majority of gig workers are satisfied with the flexibility [no number given] NG
v. Some crowd-sourcing profiles are lying. [deceptive] T
vi. More research is necessary to offer better protection. T
___ / 6
Open answer questions

Paragraph 1
3. What is Oxford University forecasting?
1 40% growth
___ / 1
Paragraph 1
4. What are the main reasons for the increase of the gig economy?
1 Digitalization
2 Financial pressures
3 Increased frequency people are changing jobs
___ / 3
Paragraph 2
5. What are the main differences between the two definitions.
1 McKinsey focuses on individual worker, pay systems and types of workers

2 V & D focus on the five key sectors

___ / 2

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Paragraph 3
6. What are the five key companies given as examples?
1 Airbnb
2 Uber
3 Deliveroo
4 Peopleperhour.com / freelancer.com
5 NO company – just the term ‘crowd funding’
___ / 5
Paragraph 4
7. What are the key benefits?
Economic 1. Labour force participation
2. Stimulating consumption
3. Boasting productivity

Individuals 1. Satisfied / work-life balance
2. Autonomy
3. Flexibility

Business 1. Global talent pool
2. Reduced operational costs
3. lower long-term contracts
___ / 6
Paragraph 5
8. What are the key problems?
Policy makers Differences in regulatory frameworks such as…
1. Tax policies
2. Applications
3. Enforcement

Workers 1. Not protected by workers’ rights
2. No entitlements Sick, holiday, Pension
3. forced to work at lower rates
4. No job security
5. No continuity

Employers 1. Not loyal to brand
2. Crowd-sourcing profile maybe inaccurate [deceptive/exaggerated]
3. Legal disputes over workers’ rights
___ / 9

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Paragraph 6
9. What is the main evidence that the Gig economy is here to stay?
Employment is highest among the under 35 well-educated age range (Vaughan and
Daverio, 2016), thus suggesting this is going to be the future of employment.
___ / 2
Paragraph 6
10. What are the most important issues to be addressed?
The biggest challenge for the gig economy is regulation and control. [must include two points]

___ / 2
Paragraph 6
11. What four aspects should regulation focus on?
1 Protection for low-skilled, low-paid gig workers
2 Better working rights
3 Disability and discrimination laws
4 Minimum wage is being earnt
___ / 4
12. Author’s stance?
Is the author for or against the Gig economy? Why?
For No
Why?
1. Sees the economy as the future of the labour market
2. But believes more regulation & research is necessary to make it fairer.

___ / 2
13. Reference words – explain what these reference words connect to: (underlined in the text)

Paragraph Word Connection

1 This 25% growth

2 those Gig workers

3 these platforms

4 It The gig economy

5 they Gig workers

6 this The collaborative economy

___ / 5

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14. Key language – explain these terms from the context / use synonyms where appropriate)

Paragraph word Explanation

1 notion A belief / conception

2 encapsulates The essential features of something

2 financially strapped In need of money

2 an umbrella term A broad term that includes most ideas

3 authentic experience Real / natural to real life

3 To showcase Exhibit / display

4 veritable Real / interesting / exciting

4 stimulating Encouraging / arousing interest

4 autonomy Self-controlling

5 deceptive Misleading / inaccurate / not true

5 embroiled Involved in argument / conflict / difficult situation

6 ‘a relic of the past’ Something from the past but has been out
modelled or improved
6 to flourish To grow / develop / prosper

___ / 11

Overall Total: ____ / 64

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UK

CSR: Corporate Social Responsibility

Reading Test


















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Corporate Social Responsibility
C. Wilson (2017)

1) Corporate Social Responsibility (CSR) has undergone profound transformation from an
ideology of uncertainty into an indispensable component of business practice. Hamidu et al,
(2015) acknowledge that it has become a mandatory tool in strategizing, complying with
regulations and maintaining standards, building corporate reputation and obtaining
customer loyalty which ‘all culminates in increasing profitability and overall attainment of
organisational objectives’ (p.83). In fact, over 9,270 companies from 166 countries are
signatories to the voluntary UN Global Compact which fulfils a companies’ obligation to
establish issues on human rights, labour standards, the environment and anti-corruption
initiatives (Wang, 2016). Overall, CSR is an integrated strategic approach in responsibility to
achieve shared value for the stakeholder and societal obligations.

2) CSR’s progression, since its introduction in 1950’s, has been quite remarkable. In the
beginning it was characterized as ‘philanthropic’ in seeking to promote the welfare of
others. This focused on mainly religious and humane philosophies, community development
and poverty alleviation (Carrol, 2008). In the 1970’s, CSR became a symbol of commitment.
It became more ‘regulated’ focusing on changing perspectives in stakeholder to manager
relationships, encouraging a conscious awareness of corporate reputation and placing
emphasis on legal and ethical issues (ibid). The 1990’s instigated what is now commonly
seen as ‘instrumental / strategic’ CSR. A prominence on environmental protection,
sustainability and transparency with a clear guide on internationalization of CSR standards
(ibid). In sum, Matten & Moon (2002) summarise this as a cluster concept of business ethics,
corporate philanthropy, corporate citizenship, sustainability and environmental
responsibility, all embedded in social, political, economic and institutional contexts.

3) Research by Weber (2008) highlights that the implementation of CSR has become a pre-
eminent feature in building and maintaining corporate reputation, which has become
regarded as an essential strategic resource factoring into a company’s competitive
advantage. Park, Lee, & Kim, (2014) claim that the key benefits behind being socially
responsible include: improved financial performance, contribution to market value, a more
general positive impact on societal stakeholders, a conscious connection with consumers,
and improved product quality. The authors also note that internal reasons such as increased
employee commitment and reduced employee turnover are important benefits. In addition,
Carrol (2008) asserts that CSR activities generate resilience to negative company
information and consumers’ awareness, and this cultivates appreciation to the attitudes and
attributions about why companies are engaging in CSR initiatives.

4) The effectiveness of CSR efforts is often difficult to observe. Companies often fail through
short-run CSR investment policies. They may lack commitment and support at senior
management level, and fail to take into consideration the issues that are salient to
stakeholder groups in various markets. Long-term investment is the key but a lack of
transparency and goal clarity often make it difficult to understand and manage the risks and
boundaries of corporate social activities (Wang, 2016). How managers prioritize and
balance aspects of CSR is often a challenge facing many corporations. Moreover, the

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complexity in organizing and managing CSR is exacerbated for multinational corporations
with global logistic chains and off-shore manufacturing industries. The values of CSR in one
country are not necessarily in accordance to another country’s governmental and
environmental policies (Hamidu et al, 2015). A final challenge is the concept of ‘shop
dressing’ or ‘greenwashing’. This is companies who are promoting the perception of
applying CSR principles through marketing and advertising, but in reality are not
implementing the business practice and thereby misleading consumers. An example of it
would be a company promoting recycled packaging but its factories are polluting local water
courses.

5) Over the past sixty years, the issue for companies has become how to conduct CSR in a
strategically and effectively planned manner that meets stakeholder’s expectations,
maximises profit and offers a clear and demonstrable narrative of its impact on the
company and for the community (Wang et al. 2016). CSR is a constantly evolving integrated
and disciplined field of business activity, which has moved on from the latest management
fad into a significant professional body of policy and practice. Although CSR is formed on
voluntary basis, there are a number of key areas that need to be addressed. The recognition
of diversity is a necessity for a universal approach. This includes better collaborative and
supportive mechanisms from source to supply chain to seller advancing the sustainability
agenda (Gov.uk, 2014). In addition, Governments could play a greater role by changing
existing legislation to the Companies Act and Social Services Act through the inclusion of
enforcing ethical standards, the adoption of effective and transparent supply chain
management practice and legal action against greenwashing / misleading marketing
campaigns. Overall, sustainability, transparency and ethical standards are key drivers in
responsible business practice and the values of the society.

References
Carroll, A.B. (2008) A History of Corporate Social Responsibility: concepts and practices, in Crane, A. et al (eds),
The Oxford Handbook of Corporate Social Responsibility, Oxford University Press, pp. 19-46

Gov.uk. (2014). Corporate Responsibility: Good for business & society. Department for Business Innovation &
Skills. Available at: https://www.gov.uk/government/uploads [Accessed 17 February 2017]

Hamidu, A. Haron, H. & Amran, A. (2015). CSR: A Review of Definitions, Core Characteristics and Theoretical
Perspectives. Journal of Social Sciences. 6 (4) 83-95

Matten, D., & Moon, J. (2004) Implicit and Explicit CSR: A conceptual framework for understanding CSR in
Europe. ICCSR Research Paper Series (29-2004), University of Nottingham

Park, J., Lee, H., & Kim, C. (2014). Corporate social responsibilities, consumer trust and corporate reputation:
South Korean consumers’ perspectives. Journal of Business Research, 67, 295-302.

Wang et al., (2016). Corporate Social Responsibility: an overview and new research directions. Academy of
Management Journal. 59, (2) 534–544.

Weber, M. (2008). The Business Case for Corporate Social Responsibility: a company level measurement
approach for CSR. European Management Journal, 26, 247-61.

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Comprehension Questions

1. Headings – choose a subtitle for each paragraph
1 B CSR popularity A The values of CSR
2 B CSR popularity
3 C The way forward
4 D CSR historical evolution
5 E Key challenges
___ / 4

2. True / False / Not Given – one question per paragraph T/F/NG
1 xxi. The UN Global compact is an obligation
2 xxii. CSR has achieved a great deal since 1950
3 xxiii. CSR has helped many companies become more competitive
4 xxiv. Long-term investment in CSR boasts productivity
5 xxv. CSR is a fad and will evolve into something different
___ / 5
Open answer questions

Paragraph 1
3. What does CSR lead to?
i)
___ / 1
Paragraph 2
4. Key changes in the three main areas:
Religious & humane philosophy
1950 Philanthropic iii)
iv)

1970s v)
ii) ___________ vi)
Legal and ethical issues

Environmental protection
i) ________ Instrumental / vii)
strategic viii)
Internationalization of CSR standards
___ / 8

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Paragraph 3
5. What are the main benefits of CSR?
1 Improved financial performance
2
3
4
5
___ / 4
Paragraph 3
6. Name the two key features of internal CSR benefits.
1
2
___ / 2
Multiple Choice:

Paragraph 4
7. A company’s failure in CSR is due to… (choose only one answer)
a only investing for a limited amount of time
b higher management are not supportive
c not being attentive to stakeholder matters
d All the above
___ / 1

Paragraph 4
8. The main problem for managers is
a prioritizing and balancing aspects of CSR
b investing long-term in CSR
c transparency and goal clarity
d All the above
___ / 1

Paragraph 4
9. The problems with global logistic chains and off-shore manufacturing industries is
a organizing CSR
b managing CSR
c international governmental and environmental policies
d All the above
___ / 1

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Definitions

Paragraph 4
10. What is green washing?



___ / 2
Open answers
Paragraph 5
11. What are the key areas that need to be addressed?
1
2
___ / 2

Paragraph 5
12. What needs to be added to the Companies Act and Social Services Act?
1
2
3
___ / 3

Linking words

13. Reference words – explain what these reference words connect to: (underlined in the text)

Paragraph Word Connection

1 it Answer: CSR

2 this

3 this

4 it

5 this

___ / 4

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13. Author’s stance?
Is the author for or against CSR? Why?
For Against [choose one]
Why?



___ / 2
14. Key language – explain these terms from the context / use synonyms where appropriate)

Paragraph Word Explanation

1 indispensable absolutely necessary

1 culminates i)

2 prominence ii)

3 pre-eminent iii)

3 resilience iv)

4 salient v)

4 exacerbated vi)

5 fad vii)

5 recognition viii)

5 mechanisms ix)

5 existing x)

___ / 10

Overall Total: ____ / 50

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Comprehension Questions ANSWERS

1. Headings – choose a subtitle for each paragraph
1 B CSR popularity A The values of CSR
2 D CSR historical evolution B CSR popularity
3 A The value of CSR C The way forward
4 A Key challenges D CSR historical evolution
5 C The way forward E Key challenges
___ / 4
2. True / False / Not Given – one question per paragraph T/F/NG
1 xxvi. The UN Global compact is an obligation [voluntary] F
2 xxvii. CSR has achieved a great deal since 1950 [remarkable] T
3 xxviii. CSR has helped many companies become more competitive NG
4 xxix. Long-term investment in CSR boasts productivity NG
5 xxx. CSR is a fad and will evolve into something different [professional practice] F
___ / 5
Open answer questions

Paragraph 1
3. What does CSR lead to?
i) increasing profitability and overall attainment of organisational objectives

___ / 1
Paragraph 2
4. Key changes in the three main areas:
Religious & humane philosophy
1950 Philanthropic iii) community development
iv) poverty alleviation

1970s v) stakeholder to manager relationships
ii) Regulated vi) conscious awareness of corporate reputation
legal and ethical issues

Environmental protection
i) 1990s Instrumental / vii) sustainability
strategic viii) transparency
Internationalization of CSR standards
___ / 8

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Paragraph 3
5. What are the main benefits of CSR?
1 Improved financial performance
2 Contribution to market value
3 Positive impact on societal stakeholders
4 Conscious connection with consumers
5 Improved product quality.
___ / 4
Paragraph 3
6. Name the two key features of internal CSR benefits.
1 Increased employee commitment
2 Reduced employee turnover
___ / 2
Multiple Choice:

Paragraph 4
7. A company’s failure in CSR is due to… (choose only one answer)
a only investing for a limited amount of time [short-run CSR investment policies]
b higher management are not supportive
[may lack commitment and support at senior management level]
c not being attentive to stakeholder matters
[Non-consideration of the issues stakeholder groups in various markets]
d All the above
___ / 1
Paragraph 4
8. The main problem for managers is…
a prioritizing and balancing aspects of CSR
b investing long-term in CSR
c transparency and goal clarity
d All the above
___ / 1
Paragraph 4
9. The problems with global logistic chains and off-shore manufacturing industries is…
a organizing CSR
b managing CSR
c governmental and environmental policies
d All the above
___ / 1

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Definitions

Paragraph 4
10. What is green washing?
1 Promoting the perception of CSR principles through marketing and advertising,
but in reality are not doing it and misleading consumers.
[key terms must be included]
___ / 2

Open answers
Paragraph 5
11. What are the key areas that need to be addressed?
1 The recognition of diversity
2 collaborative and supportive mechanisms from source to supply chain to seller
___ / 2

Paragraph 5
12. What needs to be added to the Companies Act and Social Services Act?
1 Enforcing ethical standards
2 The adoption of effective and transparent supply chain management practice
3 Legal action against greenwashing / misleading marketing campaigns
___ / 3

Linking words

13. Reference words – explain what these reference words connect to: (underlined in the text)

Paragraph Word Connection

1 it CSR

2 this CSR progression [must include progression]

3 this Resilience and awareness

4 it Shop dressing or greenwashing

5 this The recognition of diversity

___ / 4

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13. Author’s stance?
Is the author for or against CSR?
For Against [choose one]

Why? Final sentence: sustainability, transparency and ethical standards are key drivers in
responsible business practice and the values of the society

___ / 2
14. Key language – explain these terms from the context / use synonyms where appropriate)

Paragraph Word Explanation

1 indispensable absolutely necessary

1 culminates reach a point of highest development

2 prominence the state of being important, famous, or noticeable

3 pre-eminent surpassing all others; very distinguished in some
way
3 resilience the capacity to recover quickly from difficulties;
toughness
4 salient 1. most noticeable or important

4 exacerbated make (a problem, bad situation, or negative feeling)
worse
5 fad an intense and widely shared enthusiasm for
something, especially one that is short-lived; a craze
5 recognition acknowledgement of the existence

5 mechanisms established process by which something takes place
or is brought about

5 existing in operation at the current time:

___ / 10

Overall Total: ____ / 50





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Globalisation: International Trade

Reading Test















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Globalisation: International Trade
(Wilson et al. 2017)

1. Globalisation is an economic process that increases the assimilation of economies around
the world, particularly through trade and finance. The term also refers to the movement of
people (labour) and knowledge (technology) across international borders. It is an extension
of the same market forces that have operated for centuries at all levels of human economic
activity – village markets, urban industries, or financial centres beyond national borders
(IMF, 2017). Today’s global markets offer greater opportunity for people to tap into more
and larger markets around the world, which means they can have access to more capital,
technology, cheaper imports, and larger export markets. Globalisation, however is not just a
recent phenomenon. Some analysts have argued that the world economy was just as
globalised 100 years ago as it is today (Kobayashi-Hillary, 2008).

2. Globalisation offers extensive opportunities for truly worldwide development but it is not
progressing evenly. The growing gaps between rich and poor countries, and rich and poor
people within countries, are increasing. The richest quarter of the world’s population saw its
per capita income increase nearly six-fold during the last century, whereas the poorest
quarter experienced less than a three-fold increase (Harrison and Cavendish, 2014).
However, in some countries, especially in Asia, per capita incomes have been moving rapidly
towards levels in the industrial countries since 1970. Having said this, a larger number of
developing countries have made only slow progress or have lost ground. In particular, per
capita incomes in Africa have declined relative to the industrial countries and in some
countries have declined in absolute terms (IMF, 2017).

3. It is clear that some countries are amalgamating into the global economy more quickly
than others. Countries that have been able to integrate are seeing faster growth and lower
poverty. Outward-looking policies like low taxes and low trade barriers brought greater
prosperity to much of East Asia, transforming it from one of the poorest areas of the world
40 years ago (IMF, 2017). Due to these policies, living standards have risen, and it has been
possible to make progress on democracy and issues such as the environment and work
standards. By contrast, in the 1970s and 1980s when many countries in Latin America and
Africa pursued inward-looking policies (such as protectionism and state-owned companies),
their economies stagnated or declined, poverty increased and high inflation became the
norm (Kobayashi-Hillary, 2008). In many cases, especially in Africa, there were external
developments such as war and natural disasters, which made the problems worse.
Encouraging this trend towards outward-looking policies, not reversing it, is the best course
for promoting growth, development and poverty reduction (IMF, 2017).

4. The effects of globalisation can be seen in three main areas: trade, movement of people
and shared knowledge. First of all, trade. Developing countries as a whole have increased
their share of world trade from 19% in 1971 to 29% in 1999 (IMF, 2017). As mentioned,
Asia’s newly industrialised economies have done well, while Africa as a whole has done
poorly. What countries export is also important. The most profound rise by far has been in
the export of manufactured goods. The share of primary goods in world exports such as
food and raw materials, most of which are often produced by the poorest countries has

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declined (Kobayashi-Hillary, 2008). Secondly, movement of people. Workers who move from
one country to another to find better employment opportunities in advanced economies
provide a way for global wage convergence. Harrison & Cavendish (2014) claim there is also
the potential for skills to be transferred back to the developing countries and for wages in
those countries to rise. Thirdly, information exchange is an important, often overlooked,
aspect of globalisation. Direct foreign investment, which is private capital from outside the
country, brings not only an increase in the amount of a country’s capital, but also technical
innovation (ibid). More generally, knowledge about production methods, management
techniques, export markets and economic policies is available at very low cost, and it
represents a highly valuable resource for the developing countries (IMF, 2017).

5. In conclusion, globalisation is one of the most effective ways of helping developing
nations we know. As globalisation has progressed, living conditions have improved
significantly in virtually all countries. However, no country, least of all the poorest, can
afford to remain isolated from the world economy. The international community should try
by reinforcing the international financial system, through trade, and through aid to help
them integrate into the world economy, grow more rapidly, and reduce poverty. That is the
way to safeguard all people in all countries have access to the benefits of globalisation.

736 words


Reference List

Harrison, T. and Cavendish, R, E. 2014. Why International Trade is the Key to Development.
The Journal of Modern Economics. 3 (10), pp.178-183

IMF, 2017. Globalisation: Threat or opportunity [online]. Available at:
https://www.imf.org/external/np/exr/ib/2000/041200to.htm [Accessed 10 March 2017]

Kobayashi-Hillary, M. 2008. Building a future with BRICs. 1st Ed. Berlin: Springer

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Comprehension Questions

1. Headings – choose a subtitle for each paragraph
1 A Key results
2 B Definition
3 C Integration
4 D Conclusion
5 D Conclusion E Progression
___ / 4
2. True / False / Not Given – one question per paragraph
T/F/NG
P1 Globalisation is built around historical market forces
P2 Globalisation’s progression is not fairly balanced
P3 Outward looking policies can be negative for developing countries
P4 Trade is the most important effect of globalisation
P5 The global community has no responsibility to assist poorer countries
___ / 5
Open answer questions

Paragraph 1
3. What are the four key terms associated with globalization?
i) Trade
ii)
iii)
iv)
___ / 3
Paragraph 1
4. What does globalization offer people?
i) Larger markets
ii)
iii)
iv)
v)

___ / 4

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Paragraph 2
5. Per capita – what is the monetary difference between these two?
Richest quarter i)
Poorest quarter ii)
___ / 2
Paragraph 2
6. What is the difference per capita between these two continents?
Asia i)

Africa ii)

___ / 2

Multiple Choice

Paragraph 3
7. Outward looking policies are … (choose only one answer)
a democratic progression
b improved standards of living and prosperity
c lowered tariffs and trading
d All the above
___ / 1
Paragraph 3
8. Inward looking policies… (choose only one answer)
a are government run companies
b restrain trade between countries
c stall economic growth
d All the above
___ / 1

Paragraph 3
9. What’s the solution for developing countries? (choose only one answer)
a Stop the wars
b Develop outward looking policies
c Give financial aid to alleviate
d All the above
___ / 1

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Key effects

Paragraph 4
10. Trade
The strongest rise is in… i)
The main goods are… ii) iii)
These are produced in… iv)
___ / 4
Paragraph 4
11. People
Workers benefits are… i)
Global wages… ii) converge
Skill transfer to developing iii)
countries create…
___ / 2
Paragraph 4
12. Information exchange
Private capital is called… i)
Increases … ii) a country’s capital
iii)
iv)
v)
vi)
vii)
viii)
___ / 7

Paragraph 5
11. What needs to be done? The international community should strengthen…
1
2
___ / 2

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Linking words
13. Reference words – explain what these connect to: (underlined in the text)

Paragraph Word Connection

1 it Answer: Globalisation

2 this

3 which

4 which

5 them

___ / 4
14. Author’s stance?
Is the author for or against Globalisation? Why?
For Against [choose one]
Why?


___ / 2
15. Key language – explain these terms from the context / use synonyms where appropriate)

Paragraph Word Explanation

1 assimilation Integrate / to become part of something
1 To tap into i)
2 extensive ii)
2 to have lost ground iii)
3 amalgamating iv)
3 protectionism v)
4 profound vi)
4 convergence vii)
5 reinforcing viii)
5 to safeguard ix)
___ / 9

Overall Total: ____ / 55

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Comprehension Questions

1. Headings – choose a subtitle for each paragraph
1 B Definition A Key results
2 Progression B Definition
3 Integration C Integration
4 Key results D Conclusion
5 Conclusion E Progression
___ / 4
2. True / False / Not Given – one question per paragraph
T/F/NG
P1 Globalisation is built around historical market forces [same market forces that T
have operated for centuries]
P2 Globalisation’s progression is not fairly balanced [not progressing evenly] T

P3 Outward looking policies can be negative for developing countries [Encouraging F
this trend towards outward-looking policies]
P4 Trade is the most important effect of globalisation NG

P5 The global community has no responsibility to assist poorer countries [‘should NG
try to’ but does not state it has to / or doesn’t have to ]
___ / 5
Open answer questions

Paragraph 1
3. What are the four key terms associated with globalization?
i) Trade
ii) Finance
iii) Labour
iv) Technology
___ / 3
Paragraph 1
4. What does globalization offer people?
i) Larger markets
ii) More capital
iii) Technology
iv) Cheaper imports
v) Larger exports

___ / 4

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Paragraph 2
5. Per capita – what is the monetary difference between these two?
Richest quarter i) Six-fold
Poorest quarter ii) Three-fold
___ / 2
Paragraph 2
6. What is the difference per capita between these two continents?
Asia i) Moving quickly – towards levels of industrialised countries since
1970
Africa ii) Slow progress / lost ground. Declined in absolute terms
___ / 2
Multiple Choice

Paragraph 3
7. Outward looking policies are … (choose only one answer)
a democratic progression
b improved standards of living and prosperity
c lowered tariffs and trading
d All the above
___ / 1
Paragraph 3
8. Inward looking policies…
a are government run companies
b restrain trade between countries
c stall economic growth
d All the above
___ / 1

Paragraph 3
9. What’s the solution for developing countries?
a Stop the wars
b Develop outward looking policies
c Give financial aid to alleviate
d All the above
___ / 1

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Key effects

Paragraph 4
10. Trade
The strongest rise is i) export
Key goods ii) food iii) raw materials
Produced iv) Poor countries
___ / 4

Paragraph 4
11. People
Workers benefits i) Find better employment opportunities

Global wages ii) converge / convergence

Skill transfer to developing iii) wages rise
countries
___ / 2
Paragraph 4
12. Information exchange
Private capital is i) Direct Foreign Investment
Increases … ii) country’s capital
iii) technical innovation
iv) production method knowledge
v) management techniques
vi) export markets
vii) economic policies
viii) valuable resources for developing countries
___ / 7

Paragraph 5
11. What needs to be done? The international community should strengthen…
1 trade
2 aid
___ / 2

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Linking words
13. Reference words – explain what these connect to: (underlined in the text)

Paragraph Word Connection

1 it Answer: Globalisation

2 this Asia’s rise

3 which External developments

4 which Direct foreign investment

5 them Poorest countries

___ / 4
14. Author’s stance?
Is the author for or against Globalisation? Why?
For Against [choose one]
Why? Very descriptive text highlighting the key areas of globalization. BUT the authors stress
more needs to be done to make it fairer for developing countries.

___ / 2
15. Key language – explain these terms from the context / use synonyms where appropriate)

Paragraph Word Explanation

1 assimilation Integrate / to become part of something
1 To tap into i) to get benefit from / to access
2 extensive ii) covering or affecting a large area
2 to have lost ground iii) to become less popular / fall behind
3 amalgamating iv) to combine / integrate / become one
3 protectionism v) to protect domestic industries from foreign
competition
4 profound vi) very great or intense
4 convergence vii) to meet at a point / to come together
5 reinforcing viii) make stronger
5 to safeguard ix) to protect
___ / 10
Overall Total: ____ / 50

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