The passage looks to be a part of literary piece and it is written in past tense

Diagnostic tests

The primary aim of a diagnostic test is to identify the weaknesses and strengths of the candidates during a particular course of teaching. For instance, if the teacher feels that learners’ ability to use grammar is weak in a particular class, the teacher can design a short test to identify which area of grammar requires further attention. Usually, diagnostic tests are followed by carefully designed remedial teaching sessions as treatment to help the learners overcome the identified weaknesses.
Since the teacher’s aim is to identify where gaps exist in learning, the diagnostic tests may include discrete point test items. If the objective is to test the ability to use prepositions, a cloze test may be designed where the prepositions have been left out. One obvious advantage of the discrete point test items is that it may adequately measure the performance of the candidate in the particular area of focus.
Is ‘Direct testing’ good for diagnostic tests? To measure the writing performance, we recommend the use of direct writing test items such as an essay. However, the sub-skills of writing can also be measured through indirect test items such as MCQ questions where we measure sub-skills such as grammar, vocabulary, and cohesion. Direct test items reflect the true performance of the candidate to write. But in indirect test items, since we measure various sub-skills of writing, we are not confident that the students will be able to use these skills in actual writing. Thus direct testing has an advantage over the indirect testing. But in direct testing, the candidate is able to manipulate his language. He can choose, for example, one particular tense to be used almost everywhere in his writing. This means that the tester cannot judge on the performances of the candidate with regard to the other tenses. In other words, direct test items do not adequately elicit a representative sample of language of the candidate. In diagnostic test, it is mandatory to elicit predetermined language structures of the candidate to identify his weaknesses. Thus in diagnostic tests, indirect test items can be more meaningful.
Diagnostic tests are based on one particular area of teaching, usually the recent class work. These tests can be administered at the beginning of a course of study to identify which areas of language should be focused more on teaching. It is also useful to administer a diagnostic test when a new teacher takes over a class with inadequate information about the students. If, for instance, these students have already mastered certain skills, the new teacher can get a better view of the class as to what degree they have mastered these skills through a diagnostic test.
The aim of the diagnostic test is not to compare the performance of one student with that of another. The tester attempts to find out how well the students progress and to what degree they need further assistance. Therefore, these tests may not discriminate the students adequately.
The following test item serves a diagnostic purpose. It enables the teacher to identify the students’ ability to use different forms of pronouns.
Fill in the blanks in the following passage using the correct form of the pronoun.
"1.…………. ( she) is not coming with us. 2.……….. ( she) isn't well". After saying this, Helan looked at 3.………..(she) in the mirror. The dress 4.……….. (it) was very ordinary, but it looked nice on 5. ……….. (she). The white collar which had begun to turn yellow showed how old 6. ……… (it) was. 7. ……….. (we) could see that 8. …………. (it) was an age- old dress.

3.