Reading Comprehension_Passage On Economy

2.

Passage: During the 1960’s and 1970’s the primary economic development strategy of local governments in the United States was to attract manufacturing industries. Unfortunately, this strategy was usually implemented at another community’s expense: many manufacturing facilities were lured away from their moorings elsewhere through tax incentive and slick promotional efforts. Through the transfer to jobs and related revenues that resulted from this practice, one town’s triumph could become another town’s tragedy. In the 1980’s the strategy shifted from this zero-sum game to one called “high-technology development,” in which local governments competed to attract newly formed high-technology manufacturing firms. Although this approach was preferable to victimizing other geographical areas by taking their jobs, it also had its shortcomings: high-tech manufacturing firms employ only a specially trained fraction of the manufacturing workforce, and there simply are not enough high-tech firms to satisfy all geographic areas. Recently, local governments have increasingly come to recognize the advantages of yet a third strategy: the promotion of homegrown small businesses. Small indigenous businesses are created by a nearly ubiquitous resource, local entrepreneurs. With roots in their communities, these individuals are less likely to be enticed away by incentives offered by another community. Indigenous industry and talent are kept at home, creating an environment that both provides jobs and fosters further entrepreneurship. Question: The passage does NOT state which of the following about local entrepreneurs?

They are found nearly everywhere
They encourage further entrepreneurship
They attract out-of-town investors
They employ local workers

Correct Answer

A. They attract out-of-town investors

Explanation

The passage does not state that local entrepreneurs attract out-of-town investors. It mentions that local entrepreneurs create small indigenous businesses and are less likely to be enticed away by incentives offered by another community, but it does not mention anything about attracting out-of-town investors.

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3.

Passage: During the 1960’s and 1970’s the primary economic development strategy of local governments in the United States was to attract manufacturing industries. Unfortunately, this strategy was usually implemented at another community’s expense: many manufacturing facilities were lured away from their moorings elsewhere through tax incentive and slick promotional efforts. Through the transfer to jobs and related revenues that resulted from this practice, one town’s triumph could become another town’s tragedy. In the 1980’s the strategy shifted from this zero-sum game to one called “high-technology development,” in which local governments competed to attract newly formed high-technology manufacturing firms. Although this approach was preferable to victimizing other geographical areas by taking their jobs, it also had its shortcomings: high-tech manufacturing firms employ only a specially trained fraction of the manufacturing workforce, and there simply are not enough high-tech firms to satisfy all geographic areas. Recently, local governments have increasingly come to recognize the advantages of yet a third strategy: the promotion of homegrown small businesses. Small indigenous businesses are created by a nearly ubiquitous resource, local entrepreneurs. With roots in their communities, these individuals are less likely to be enticed away by incentives offered by another community. Indigenous industry and talent are kept at home, creating an environment that both provides jobs and fosters further entrepreneurship. Question: The tone of the passage suggests that the author is most optimistic about the economic development potential of which of the following groups?

Local governments
High-technology promoters
Local entrepreneurs
Manufacturing industry managers

Correct Answer

A. Local entrepreneurs

Explanation

The passage indicates that the author is most optimistic about the economic development potential of local entrepreneurs. The passage highlights the advantages of promoting small indigenous businesses, which are created by local entrepreneurs. It states that these individuals are less likely to be enticed away by incentives offered by another community, and their presence keeps indigenous industry and talent at home, fostering further entrepreneurship and creating jobs. This suggests that the author sees local entrepreneurs as a valuable resource for economic development.

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4.

Directions (Q. 1 – 5): The passage given below is followed by a set of five questions. Choose the most appropriate answer to each question. During the 1960’s and 1970’s the primary economic development strategy of local governments in the United States was to attract manufacturing industries. Unfortunately, this strategy was usually implemented at another community’s expense: many manufacturing facilities were lured away from their moorings elsewhere through tax incentive and slick promotional efforts. Through the transfer to jobs and related revenues that resulted from this practice, one town’s triumph could become another town’s tragedy. In the 1980’s the strategy shifted from this zero-sum game to one called “high-technology development,” in which local governments competed to attract newly formed high-technology manufacturing firms. Although this approach was preferable to victimizing other geographical areas by taking their jobs, it also had its shortcomings: high-tech manufacturing firms employ only a specially trained fraction of the manufacturing workforce, and there simply are not enough high-tech firms to satisfy all geographic areas. Recently, local governments have increasingly come to recognize the advantages of yet a third strategy: the promotion of homegrown small businesses. Small indigenous businesses are created by a nearly ubiquitous resource, local entrepreneurs. With roots in their communities, these individuals are less likely to be enticed away by incentives offered by another community. Indigenous industry and talent are kept at home, creating an environment that both provides jobs and fosters further entrepreneurship. Question: The primary purpose of the passage is to

Advocate more effective strategies for encouraging the development of high-technology enterprises in the United States
Contrast the incentives for economic development offered by local governments with those offered by the private sector
Acknowledge and counter adverse criticism of programs being used to stimulate local economic development
Review and evaluate strategies and programs that have been used to stimulate economic development

Correct Answer

A. Review and evaluate strategies and programs that have been used to stimulate economic development

Explanation

The passage discusses different strategies that local governments in the United States have used to stimulate economic development. It first mentions the strategy of attracting manufacturing industries in the 1960s and 1970s, which had negative consequences for other communities. Then, it discusses the shift to high-technology development in the 1980s, which also had its shortcomings. Finally, it talks about the recognition of the advantages of promoting homegrown small businesses. The passage does not advocate for a specific strategy or contrast incentives offered by local governments with the private sector. Instead, it primarily aims to review and evaluate the different strategies and programs that have been used to stimulate economic development.

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5.

Passage: Unemployment is an important index of economic slack and lost output, but it is much more than that. For the unemployed person, it is often a damaging affront to human dignity and sometimes a catastrophic blow to family life. Nor is this cost distributed in proportion to the ability to bear it. It falls most heavily on the young, the semi-skilled and unskilled, the black person, the older worker, and the underemployed person in a low income rural area who is denied the option of securing more rewarding urban employment. The concentrated incidence of unemployment among specific groups in the population means far greater costs to society that can be measured simply in hours of involuntary idleness of dollars of income lost. The extra costs include disruption of the careers of young people, increased juvenile delinquency, and perpetuation of conditions which breed racial discrimination in employment and otherwise deny equality of opportunity. There is another and more subtle cost. The social and economic stains of prolonged underutilization create strong pressures for cost-increasing solutions. On the side of labour, prolonged high unemployment leads to “share-the-work” pressures for shorter hours, intensifies resistance to technological change and to rationalisation of work rules, and, in general increases incentives for restrictive and inefficient measures to protect existing jobs. On the side of business, the weakness of markets leads to attempts to raise prices to cover high average overhead costs and to pressures for protection against foreign and domestic competition. On the side of agriculture, higher prices are necessary to achieve income objectives when urban and industrial demand for foods and fibres is depressed and lack of opportunities for jobs and higher incomes in industry keep people on the farm. In all these cases, the problems are real and the claims understandable. But the solutions suggested raise costs and promote inefficiency. By no means will the least of the advantages of full utilisation be a diminution of these pressures. They will be weaker, and they can be more firmly resisted in good conscience, when markets are generally strong and job opportunities are plentiful. The demand for labour is derived from the demand for the goods and services which labour participates in producing. Thus, unemployment will be reduced to 4 percent of the labour force only when the demand for the myriad of goods and services –automobiles, clothing, food, haircuts, electric generators, highways, and so on – is sufficiently great in total to require the productive efforts of 96 per cent of the civilian labour force. Although, many goods are initially produced as materials or components to meet demands related to the further production of other goods, all goods (and services) are ultimately destined to satisfy demands that can, for convenience, be classified into four categories; consumer demand,business demand for new plants and machinery and for additions to inventories, net export demand of foreign buyers, and demand of government units, federal, state and local. Thus gross national product (GNP), our total output, is the sum of four major components of expenditure; personal consumption expenditures, gross private domestic investment, net exports and government purchases of goods and services. The primary line of attack on the problem of unemployment must be through measures which will expand one or more of these components of demand. Once a satisfactory level of employment has been achieved in a growing economy, economic stability requires the maintenance of a continuing balance between growing productive capacity and growing demand. Action to expand demand is called for not only when demand actually declines and recession appears but even when the rate of growth of demand falls short of the rate of growth of capacity. Question: Serious unemployment leads labour groups to demand

More jobs by having everyone work shorter hours
“No fire” policies
Higher wages to those employed
Cost-cutting solutions

Correct Answer

A. More jobs by having everyone work shorter hours

Explanation

Serious unemployment leads labor groups to demand more jobs by having everyone work shorter hours. This is because when there is high unemployment, there is a surplus of labor and not enough jobs for everyone. Labor groups may advocate for shorter working hours for all employees in order to distribute the available work more evenly and provide employment opportunities for more people. This solution aims to address the problem of unemployment by sharing the available work among a larger number of individuals.

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6.

Passage: Unemployment is an important index of economic slack and lost output, but it is much more than that. For the unemployed person, it is often a damaging affront to human dignity and sometimes a catastrophic blow to family life. Nor is this cost distributed in proportion to the ability to bear it. It falls most heavily on the young, the semi-skilled and unskilled, the black person, the older worker, and the underemployed person in a low income rural area who is denied the option of securing more rewarding urban employment. The concentrated incidence of unemployment among specific groups in the population means far greater costs to society that can be measured simply in hours of involuntary idleness of dollars of income lost. The extra costs include disruption of the careers of young people, increased juvenile delinquency, and perpetuation of conditions which breed racial discrimination in employment and otherwise deny equality of opportunity. There is another and more subtle cost. The social and economic stains of prolonged underutilization create strong pressures for cost-increasing solutions. On the side of labour, prolonged high unemployment leads to “share-the-work” pressures for shorter hours, intensifies resistance to technological change and to rationalisation of work rules, and, in general increases incentives for restrictive and inefficient measures to protect existing jobs. On the side of business, the weakness of markets leads to attempts to raise prices to cover high average overhead costs and to pressures for protection against foreign and domestic competition. On the side of agriculture, higher prices are necessary to achieve income objectives when urban and industrial demand for foods and fibres is depressed and lack of opportunities for jobs and higher incomes in industry keep people on the farm. In all these cases, the problems are real and the claims understandable. But the solutions suggested raise costs and promote inefficiency. By no means will the least of the advantages of full utilisation be a diminution of these pressures. They will be weaker, and they can be more firmly resisted in good conscience, when markets are generally strong and job opportunities are plentiful. The demand for labour is derived from the demand for the goods and services which labour participates in producing. Thus, unemployment will be reduced to 4 percent of the labour force only when the demand for the myriad of goods and services –automobiles, clothing, food, haircuts, electric generators, highways, and so on – is sufficiently great in total to require the productive efforts of 96 per cent of the civilian labour force. Although, many goods are initially produced as materials or components to meet demands related to the further production of other goods, all goods (and services) are ultimately destined to satisfy demands that can, for convenience, be classified into four categories; consumer demand,business demand for new plants and machinery and for additions to inventories, net export demand of foreign buyers, and demand of government units, federal, state and local. Thus gross national product (GNP), our total output, is the sum of four major components of expenditure; personal consumption expenditures, gross private domestic investment, net exports and government purchases of goods and services. The primary line of attack on the problem of unemployment must be through measures which will expand one or more of these components of demand. Once a satisfactory level of employment has been achieved in a growing economy, economic stability requires the maintenance of a continuing balance between growing productive capacity and growing demand. Action to expand demand is called for not only when demand actually declines and recession appears but even when the rate of growth of demand falls short of the rate of growth of capacity. Question: The demand for labour is

A derived demand
About 4 per cent of the total work force
Declining
Dependent upon technology

Correct Answer

A. A derived demand

Explanation

The passage explains that the demand for labor is derived from the demand for goods and services that labor helps produce. This means that the demand for labor is not independent, but rather dependent on the demand for the final products. Therefore, the correct answer is "a derived demand".

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7.

Passage: During the 1960’s and 1970’s the primary economic development strategy of local governments in the United States was to attract manufacturing industries. Unfortunately, this strategy was usually implemented at another community’s expense: many manufacturing facilities were lured away from their moorings elsewhere through tax incentive and slick promotional efforts. Through the transfer to jobs and related revenues that resulted from this practice, one town’s triumph could become another town’s tragedy. In the 1980’s the strategy shifted from this zero-sum game to one called “high-technology development,” in which local governments competed to attract newly formed high-technology manufacturing firms. Although this approach was preferable to victimizing other geographical areas by taking their jobs, it also had its shortcomings: high-tech manufacturing firms employ only a specially trained fraction of the manufacturing workforce, and there simply are not enough high-tech firms to satisfy all geographic areas. Recently, local governments have increasingly come to recognize the advantages of yet a third strategy: the promotion of homegrown small businesses. Small indigenous businesses are created by a nearly ubiquitous resource, local entrepreneurs. With roots in their communities, these individuals are less likely to be enticed away by incentives offered by another community. Indigenous industry and talent are kept at home, creating an environment that both provides jobs and fosters further entrepreneurship. Question: The passage suggests which of the following about the majority of United States manufacturing industries before the high-technology development era of the 1980’s?

They lost many of their most innovative personnel to small entrepreneurial enterprises
They experienced a major decline in profits during the 1960’s and 1970’s
They could provide real economic benefits to the areas in which they were located
They employed workers who had no specialized skills

Correct Answer

A. They could provide real economic benefits to the areas in which they were located

Explanation

The passage suggests that before the high-technology development era of the 1980's, the majority of United States manufacturing industries could provide real economic benefits to the areas in which they were located. This is evident from the statement that many manufacturing facilities were lured away from their moorings through tax incentive and promotional efforts, indicating that these industries were seen as valuable assets for local communities.

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8.

Passage: During the 1960’s and 1970’s the primary economic development strategy of local governments in the United States was to attract manufacturing industries. Unfortunately, this strategy was usually implemented at another community’s expense: many manufacturing facilities were lured away from their moorings elsewhere through tax incentive and slick promotional efforts. Through the transfer to jobs and related revenues that resulted from this practice, one town’s triumph could become another town’s tragedy. In the 1980’s the strategy shifted from this zero-sum game to one called “high-technology development,” in which local governments competed to attract newly formed high-technology manufacturing firms. Although this approach was preferable to victimizing other geographical areas by taking their jobs, it also had its shortcomings: high-tech manufacturing firms employ only a specially trained fraction of the manufacturing workforce, and there simply are not enough high-tech firms to satisfy all geographic areas. Recently, local governments have increasingly come to recognize the advantages of yet a third strategy: the promotion of homegrown small businesses. Small indigenous businesses are created by a nearly ubiquitous resource, local entrepreneurs. With roots in their communities, these individuals are less likely to be enticed away by incentives offered by another community. Indigenous industry and talent are kept at home, creating an environment that both provides jobs and fosters further entrepreneurship. Question: The author of the passage mentions which of the following as an advantage of high-technology development?

It encourages the modernization of existing manufacturing facilities
It promotes healthy competition between rival industries
It encourages the growth of related industries
It does not advantage one local workforce at the expense of another

Correct Answer

A. It does not advantage one local workforce at the expense of another

Explanation

High-technology development is mentioned as an advantage because it does not advantage one local workforce at the expense of another. Unlike the previous strategy of attracting manufacturing industries, high-tech manufacturing firms do not take jobs away from other geographical areas. This approach promotes economic growth without victimizing other communities.

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9.

Passage: Unemployment is an important index of economic slack and lost output, but it is much more than that. For the unemployed person, it is often a damaging affront to human dignity and sometimes a catastrophic blow to family life. Nor is this cost distributed in proportion to the ability to bear it. It falls most heavily on the young, the semi-skilled and unskilled, the black person, the older worker, and the underemployed person in a low income rural area who is denied the option of securing more rewarding urban employment. The concentrated incidence of unemployment among specific groups in the population means far greater costs to society that can be measured simply in hours of involuntary idleness of dollars of income lost. The extra costs include disruption of the careers of young people, increased juvenile delinquency, and perpetuation of conditions which breed racial discrimination in employment and otherwise deny equality of opportunity. There is another and more subtle cost. The social and economic stains of prolonged underutilization create strong pressures for cost-increasing solutions. On the side of labour, prolonged high unemployment leads to “share-the-work” pressures for shorter hours, intensifies resistance to technological change and to rationalisation of work rules, and, in general increases incentives for restrictive and inefficient measures to protect existing jobs. On the side of business, the weakness of markets leads to attempts to raise prices to cover high average overhead costs and to pressures for protection against foreign and domestic competition. On the side of agriculture, higher prices are necessary to achieve income objectives when urban and industrial demand for foods and fibres is depressed and lack of opportunities for jobs and higher incomes in industry keep people on the farm. In all these cases, the problems are real and the claims understandable. But the solutions suggested raise costs and promote inefficiency. By no means will the least of the advantages of full utilisation be a diminution of these pressures. They will be weaker, and they can be more firmly resisted in good conscience, when markets are generally strong and job opportunities are plentiful. The demand for labour is derived from the demand for the goods and services which labour participates in producing. Thus, unemployment will be reduced to 4 percent of the labour force only when the demand for the myriad of goods and services –automobiles, clothing, food, haircuts, electric generators, highways, and so on – is sufficiently great in total to require the productive efforts of 96 per cent of the civilian labour force. Although, many goods are initially produced as materials or components to meet demands related to the further production of other goods, all goods (and services) are ultimately destined to satisfy demands that can, for convenience, be classified into four categories; consumer demand,business demand for new plants and machinery and for additions to inventories, net export demand of foreign buyers, and demand of government units, federal, state and local. Thus gross national product (GNP), our total output, is the sum of four major components of expenditure; personal consumption expenditures, gross private domestic investment, net exports and government purchases of goods and services. The primary line of attack on the problem of unemployment must be through measures which will expand one or more of these components of demand. Once a satisfactory level of employment has been achieved in a growing economy, economic stability requires the maintenance of a continuing balance between growing productive capacity and growing demand. Action to expand demand is called for not only when demand actually declines and recession appears but even when the rate of growth of demand falls short of the rate of growth of capacity. Question: According to the passage, a typical business reaction to a recession is to press for

Higher unemployment insurance
Government action
Protection against imports
Restrictive business practices

Correct Answer

A. Restrictive business practices

Explanation

The passage states that during a recession, businesses may react by pressing for restrictive business practices. This is because prolonged high unemployment leads to pressures for shorter working hours, resistance to technological change and rationalization of work rules, and an increase in incentives for restrictive and inefficient measures to protect existing jobs. Therefore, businesses may resort to restrictive practices in order to safeguard their interests and protect their employees' jobs during an economic downturn.

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