Comprehension

The opinion polls had been wrong. Although they were signalling a weakening in Labour’s lead in the days before the general election — which pointed to a hung parliament — many working-class voters had been embarrassed to tell middle-class pollsters that they were intending to vote Labour. The final result on April 9, 1992, which gave Neil Kinnock a working majority of 30, was a turnaround of the century.
As John Major cleared his desk in Downing Street, pundit after pundit lined up to criticise his lacklustre campaign. The trouble was, they all agreed, that the Conservative Party no longer had a message or political purpose. Its representation in the north of England was decimated; its future as a national party doubtful.
For Kinnock the victory was a sweet reward for nine years of Herculean labour in making his party electable. Not only had he a working majority, but the divisions in Conservative ranks —between anti-Europeans, free marketers and moderates — threatened to split the party. Having set himself the objective of heading a two or three term government, Kinnock made his cabinet appointments with the long haul in min(d) There were few surprises. John Smith, with whom he coexisted uneasily, was made chancellor; Roy Hattersley became home secretary; Gerald Kaufmann went to the foreign office; inveterate Euro-sceptic Bryan Gould took over environment; and Gordon Brown went to trade. It was, as many commentators conceded, a much more heavyweight cabinet than any of the Conservatives could have mustere(d)
But the new cabinet was to have its first trial of strength very soon. The problem was the foreign exchange markets. Although both Kinnock and Smith had, throughout, the election campaign, reaffirmed their commitment to hold the pound’s parity at 2.95DM inside the ERM, the foreign exchange markets simply did not believe them. Every previous Labour government had devalued; what reason was there to suppose this one would be different? The pressure built up immediately. On Friday, April 10, the Bank of England managed to hold the line only by spending £4 billion — around a sixth of its total reserves — to support the exchange rate. But late that night, as the New York markets closed, the Governor of the Bank of England felt the devaluation to a meeting at 11, Downing Street with Smith and the permanent secretary to the Treasury, Sir Terence Burns. If, said the governor, the pound was to survive the coming week inside the ERM, then Smith would have to demonstrate his resolve by raising interest rates — by at least 2 per cent. It would also help, added the officials, if the government were to commit Britain to full monetary union and to meet the Maastricht criteria for a single currency. This would mean that both the taxation from Smith’s first budget would have to be used to reduce government borrowing and the manifesto promises to raise child benefit and pensions be postpone(d)
Smith listened to Eddie George — number two at the Bank of England and the arbiter of British exchange rate policy — explain that, at the current rate of reserve loss, Britain’s reserves would have run out by the following weeken(d) The markets needed decisive action. 
And they needed to know, by the night of Sunday, April 12, at the very latest, what the government would do when the far-eastern markets opened after the weeken(d) Sir Terence advised that once the markets recognised the government was resolved to hold the exchange rate, pressure would quickly subside and the interest rate increases could be reverse(d) The name of the game was earning credibility.
Although Smith had been warned to expect a Treasury/Bank of England move to assert the cannons of economic orthodoxy, he had hoped to have been more than a few hours into his chancellorship before the pressures started to mount. As it stood, he felt like the victim of a coup and wondered to what extent the foreign exchange market selling had been prompted by the Bank of England’s ham fisted intervention — almost designed to manufacture a run on the poun(d) In any case, he could do nothing without conferring with the prime minister. In fact Kinnock had asked Smith to have the preliminary Bank of England meeting without him. Although he was not at one with his chancellor over economic policy and distrusted his judgement, he wanted to complete his cabinet appointments — and confer with his own advisers about how to react to what he knew the bank and treasury recommendations would be. He was determined to avoid being bounced into decisions before he had decided his line. The alternative was to apply to the EC for a realignment conference, in which many more currencies would be devalue(d) But that could hardly be done then; it would have to wait until the following weeken(d) And it was not clear if the pound could be devalued sufficiently, or if other countries would follow the British lea(d) Not only would such a move be regarded in the EC as a failure of the British government to make a difference; and be accompanied by devaluation.

Question: 1

The word 'pundit', in the context of the passage, means:

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When interpreting vocabulary in context, focus on the surrounding sentences to determine the intended modern meaning rather than relying solely on historical definitions.
Updated On: Aug 6, 2025
  • a religious leader
  • a psychologist
  • an expert
  • a paleontologist
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The Correct Option is C

Solution and Explanation

In the passage, after the election results, the author mentions that “pundit after pundit” lined up to criticise John Major's campaign. Here, "pundit" is used to describe individuals offering authoritative opinions or commentary, especially in political matters. The term "pundit" historically comes from Hindi/Sanskrit meaning a learned person, but in modern English, it refers to an expert or commentator in a specific fiel(d) It does not mean a religious leader (a), psychologist (b), or paleontologist (d) in this context. The passage makes it clear that these pundits are political commentators analysing election campaigns — hence, the best fit is "an expert".
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Question: 2

What was the main problem facing the new cabinet?

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Always look for the exact phrasing used in the passage when the question asks for "main problem" or "primary cause" — subtle distinctions matter.
Updated On: Aug 6, 2025
  • The dissension in the ranks of the party.
  • The devaluation of the currency.
  • The foreign exchange market problem.
  • The monetary union problem.
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The Correct Option is C

Solution and Explanation

The passage clearly states that “the new cabinet was to have its first trial of strength very soon. The problem was the foreign exchange markets.” Although the foreign exchange crisis was linked to the risk of devaluation of the pound and issues like monetary union, the root and immediate problem was the loss of market confidence and the selling pressure on the poun(d) Thus, while options (b) and (d) are related topics within the broader economic situation, the exact phrase used in the passage is “foreign exchange markets,” making option (c) the most accurate.
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Question: 3

Who, according to the passage, is the leader of the Labour Party?

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Identify key political positions by noting who is making leadership decisions or credited with leading election campaigns.
Updated On: Aug 6, 2025
  • Neil Kinnock
  • John Smith
  • Gerald Kaufmann
  • Roy Hattersley
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The Correct Option is A

Solution and Explanation

In the opening lines, the passage describes the election victory and says “For Kinnock the victory was a sweet reward for nine years of Herculean labour in making his party electable.” This indicates Kinnock is the party leader. John Smith is mentioned later as the chancellor in Kinnock’s cabinet, while Kaufmann and Hattersley are also cabinet members, not the party leader. Thus, only Neil Kinnock matches the role describe(d)
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Question: 4

What, according to the treasury secretary, was the only way out of the exchange problem?

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When identifying “only way out” solutions, focus on explicit recommendations given in the same sequence as presented in the passage.
Updated On: Aug 6, 2025
  • Devaluation of the currency
  • Rise in interest rates
  • Government spending
  • Raising taxes
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The Correct Option is B

Solution and Explanation

The governor of the Bank of England and Treasury officials told Smith that to maintain the pound’s ERM parity, he “would have to demonstrate his resolve by raising interest rates — by at least 2 per cent.” This was presented as the only viable immediate option to restore market confidence. Devaluation was discussed later as an alternative but not the immediate or “only” way out according to the treasury secretary in that moment.
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Question: 5

It may be inferred from the passage that:

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Look for subtle cues in political/economic passages that indicate “influence” rather than complete control or obedience.
Updated On: Aug 6, 2025
  • the Bank of England would go along with whatever the government decide(d)
  • the prime minister was a puppet in the hands of the Bank of Englan(d)
  • the Bank of England was completely independent of the government.
  • the Bank of England could put enormous pressure on the government to formulate policy.
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The Correct Option is D

Solution and Explanation

The passage narrates that immediately after the election, the Bank of England summoned the chancellor to recommend urgent rate hikes and monetary union commitments, effectively forcing the government to act quickly. While the Bank is part of the UK system, it’s evident that it had significant influence, almost coercive, in shaping urgent policy decisions — showing pressure but not complete independence (c) or subservience (a, b).
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Question: 6

Why did Kinnock ask Smith to attend the Bank of England meeting without him?

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When a leader delegates a meeting, always check for stated motivations rather than assuming interpersonal conflict.
Updated On: Aug 6, 2025
  • Because he did not get along with Smith.
  • Because he wanted to use that time to confer with others.
  • Because he already met them and did not want to meet them again.
  • Because he was afraid of being censured by them.
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The Correct Option is B

Solution and Explanation

The passage explicitly says Kinnock “wanted to complete his cabinet appointments — and confer with his own advisers about how to react to what he knew the bank and treasury recommendations would be.” This shows his decision was strategic, to prepare his stance, not avoidance or hostility.
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Question: 7

Why, according to the author, was the realignment conference not a viable option for the government?

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When two reasons are explicitly given in a passage, and both are true, the combined answer is usually correct.
Updated On: Aug 6, 2025
  • Because other countries may not follow the British lead in devaluation.
  • Because the higher interest rates to be given by Britain may deplete resources further.
  • Both (a) and (b)
  • Neither (a) nor (b)
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The Correct Option is C

Solution and Explanation

The text notes that a realignment conference “could hardly be done then” and that “it was not clear if the pound could be devalued sufficiently, or if other countries would follow the British lead,” and it would also “be accompanied by devaluation” with additional negative impacts. Thus, both reasons — lack of guaranteed international cooperation and resource-draining high rates — are vali(d)
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Question: 8

Which of the following do not belong to the Labour cabinet?

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Names in political contexts should be verified — sometimes non-person terms (like treaties or locations) are included to test attention to detail.
Updated On: Aug 6, 2025
  • Mr John Smith
  • Mr Bryan Gould
  • Mr Maastricht
  • Mr G. Brown
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The Correct Option is C

Solution and Explanation

The passage lists cabinet members: John Smith, Roy Hattersley, Gerald Kaufmann, Bryan Gould, Gordon Brown. There is no person named “Mr Maastricht”; Maastricht is the treaty criteria referred to in monetary union context. Hence option (c) is correct.
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Question: 9

What, according to the passage, was not a reason for the defeat of the Conservative Party?

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When asked for “not a reason,” scan for explicit causes in the passage — absence in the text is the strongest indicator.
Updated On: Aug 6, 2025
  • A lacklustre campaign
  • Wrong policies
  • No special message
  • No political purpose
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The Correct Option is B

Solution and Explanation

The text attributes the defeat to “a lacklustre campaign,” and says “the Conservative Party no longer had a message or political purpose.” Nowhere does it mention wrong policies as a cause for defeat. Therefore, option (b) is correct.
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