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     EduGorilla 
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    Direction: Read the following passage carefully and answer the questions that follow.

    When the Labour Department reported last month that average hourly earnings had jumped 2.9 percent in January, it looked as though the long, steady recovery in the American job market might at last be translating into faster wage gains for the nation’s workers. Then came Friday and the latest jobs report, which showed that wage growth was weaker in January than initially reported and that the gains in February were weaker still, up just 2.6 percent from a year earlier.
    The muddled data on wages was a potent reminder that even the strongest job market in a generation has not been robust enough to reverse a longstanding pattern of lagging pay. But the mixed messages also highlight the challenge of trying to figure out where wages are headed: Not only are the sources of the data volatile, but economists say they may also be declining in quality.
    In recent months, different sources have told sharply diverging stories about how quickly companies are raising employees’ pay. Wage growth may be slowing drastically after a period of strong gains, or it may be picking up after an extended slump. Or it may be stuck at more or less the same plodding pace that workers have become accustomed to for much of the economic recovery. “We have trouble measuring any of these things,” said Tara Sinclair, an economist at George Washington University and for the job-search site Indeed. “This is definitely one of those situations where you can feed in the data and get out whatever response you’re looking for.”
    The problem is not new. It has, however, risen in importance as wage growth — why it has been slow, and when that might change — has emerged as a pre-eminent issue in Washington and on Wall Street. Congressional Republicans, their eyes on the fall elections, are seeking evidence that their recently passed tax cuts are making an impact on pay checks. Federal Reserve policymakers are looking for signs that the tightening labour market is causing inflation.
    Financial markets tumbled a month ago after the data showing strong wage gains heightened fears that inflation would pick up, forcing the Fed to hasten interest-rate increases. The report released on Friday had the opposite effect: Stocks rallied on the prospect that strong job growth could continue without causing the economy to overheat.

    Source: nytimes.com


    What fear did the data showing strong wage gains bring to the financial markets?

    Options :-

    1. They feared that fiscal policies would be employed to prevent a possible collapse of the world financial system.
    2. The fear that inflation would pick up and the federation would quickly increase the interest-rate.
    3. They feared that low interest rates might encourage mortgage lending.
    4. They feared that high mortgage approval rates might lead to a large pool of homebuyers.
    5. They feared that the high delinquency rates might lead to a rapid devaluation of financial instruments. 
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