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GATE 2020 AE – Question 6

General Aptitude · Verbal Aptitude: Reading Comprehension and Narrative Sequencing · 2 marks · Multiple choice

The passage calls the 2008 global financial crisis the most serious worldwide financial crisis and says it began with the 2007 US sub-prime lending crisis. Sub-prime lending to borrowers who might struggle to repay led to the banking crisis and Lehman Brothers’ 2008 collapse. Excess liquidity following the East Asian crisis gave rise to that lending. Which sequence has the correct precedence according to this passage?

  1. East Asian crisis → sub-prime lending crisis → banking crisis → global financial crisis.
  2. Sub-prime lending crisis → global financial crisis → banking crisis → East Asian crisis.
  3. Banking crisis → sub-prime lending crisis → global financial crisis → East Asian crisis.
  4. Global financial crisis → East Asian crisis → banking crisis → sub-prime lending crisis.

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Correct answer: (A) East Asian crisis → sub-prime lending crisis → banking crisis → global financial crisis.

Explanation

Read the causal order supplied in the passage: East Asian crisis precedes excess liquidity and sub-prime lending; that lending precedes the banking crisis; the banking crisis develops into the worldwide crisis. This gives A. The question tests the passage’s stated sequence rather than requiring a separate historical causal assessment.

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