Passage 1

SECTION 1
READING PASSAGE 1
You should spend about 20 minutes on Question 1-13 which are based on Reading
Passage 2 below.

With rapid urbanisation, more people now live in cities than in the countryside, and this
number is set to rise. For all the benefits cities bestow, they are expensive places. In
some years, Tokyo records the highest cost of living; in others, Moscow. In 2014, for
expatriates, Luanda, the capital of Angola, received the dubious accolade; and, for
Angolans themselves, it had also suddenly become pricey with real estate going through
the roof, so to speak, and food being prohibitive – even locally sourced mangoes were
$5 a kilo.
What can urbanites do to reduce the financial burden of paying for food? Diet? Grow
their own? Beg for subsidies? Some economists have proposed that they buy contracts
giving rights to a food stream in perpetuity, for example, a kilogram of beef would be
delivered weekly from the date the contract started until the end of the owner's life. In
essence, this is what house purchase is – indefinite security of a single commodity. As is
the case with buying a house, a loan from a financial institution might be necessary for
the beef contract, even if it were merely for Australian blade steak and not Japanese
Wagu. The contract could also be sold at the current market price if its owner moved
out of delivery range or renounced beef.
In order to maintain or increase the value of their investment, it is likely some owners
would support national and international policies to limit food production – a sound
idea in a world where 40% of food goes to waste.
But let's imagine, in this system, a consumer purchased a 25-year contract for beef,
which, over time, doubled in value. Naturally, at sale, the owner would make a tidy
profit. Conversely, if mad cow disease erupted, and no one dared eat beef, then the
vendor would suffer. If the owner had bought ten beef contracts, he or she might even
go bankrupt in this scenario.
Let's also imagine that people bought contracts on items they had no intention of
consuming: that the health-conscious purchased, yet eschewed, saturated-fat meat;
that shrewd amoral vegetarians speculated in beef, as they already buy share portfolios
in which multinational agri-business is represented, or they deposit money into banks
that do just that on their behalf.

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Passage 1

It is quite plausible that this speculative behaviour could lead to the overheating of the
food-stream market. The state may intervene, attempting to cool things down, or it may
tolerate such activity. Indeed, a government that proposed a capital gains tax or high
death duties on food-stream contracts might be voted out in favour of another that
believed in laissez-faire.* Besides which, an investment contract may be a way to realise
wealth when there are few other possibilities either because the stock market is highly
volatile, or much of the local economy generates little revenue, as is the case in Angola
and many developing countries. Indeed, food-stream speculation could become a
middle-class prerogative, indulged in by legislative members themselves.
I hope by now, you've realised this essay is a spoof. Yet, the fantastic food-stream
market is reminiscent of the global housing market, where homeownership and
property speculation have become the privilege of a few at great expense to the many,
who either cannot participate, or sign their lives away to banks. You may also have
realised that when I bring this topic up at a dinner party, for instance, I am usually
shouted down, despite what I believe to be its inherent logic, because my friends
consider a house as more tangible than a steak, and their identities are bound up with
vague but powerful notions of property rights and independence.
I do concede that home-ownership offers security (not having to move, being connected
to one particular neighbourhood) and creativity (being able to modify and decorate as
you please), but I would prefer people rent rather than buy in an effort to lower
property prices and to encourage investment in other sectors of the economy.
Economists Moretti and Chang-Tai Hsieh of the University of Chicago have estimated
that US output between 1999 and 2009 was 13% lower than it could have been because
high housing costs forced so many people to move. Income locked up in housing could
otherwise have been spent on local businesses, like restaurants or gyms, and job
creation would likely have ensued.
So, next time you toss a steak on the barbecue, ponder whether we should treat food in
the same way we treat housing, or whether we should treat housing as we do food.
*French for 'allow to do'. An economic doctrine advocating that commerce should be
free of state controls of any kind.

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Passage 1

Questions 1-7
Complete the notes below.
Choose NO MORE THAN TWO WORDS from the passage.
Write your answer in boxes 1-7 on your answer sheet.

A food-stream contract
• Would guarantee access to one kind of food stream 1……...............
• Due to its expense, a bank 2.....................might be needed to buy one
• Could be bought and sold at the current 3.....................
• When sold, could result in a decent 4.....................or a considerable loss
• Could be purchased on food a person did not plan on 5.....................
• May be one of the few legitimate ways to make money when the stock market is very
6................or other parts of the economy perform poorly
• Would probably be a privilege of the 7..................... and members of parliament

Questions 8-12
Do the statements below agree with the information given in Passage 1?
In boxes 8-12 on your answer sheet, write:
TRUE if the statement agrees with the information.
FALSE if the statement contradicts the information.
NOT GIVEN if there is no information on this.
8 The writer makes an analogy between the current housing and food markets.
9 The writer rents his or her own home.
10 The writer's friends share his or her ideas on the property market.
11 The writer thinks people like to own their homes because they can customise them.
12 Because Americans spent so much on housing, other parts of the economy suffered.

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Passage 1

Question 13
What would be a suitable title for Passage 1?
Choose the correct letter A, B, C, D, or E.
Write the correct letter in box 13 on your answer sheet.
A How to make homes affordable
B Buying a house is a bad investment
C Rethinking the housing market
D A new model for buying and selling food
E The madness of house and food prices

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Passage 1

ANSWER

1. in perpetuity
2. loan
3. market price
4. profit
5. consuming
6. volatile
7. middle class
8. FALSE
9. NOT GIVEN
10. FALSE
11. TRUE
12. TRUE
13. C