Reading comprehension Home Exercise- 17 PASSAGE B

The worst and longest economic crisis in the modern industrial world, the Great Depression in the United States had devastating consequences for American society. At its lowest depth (1932- 33), more than 16 million people were unemployed, more than 5,000 banks had closed, and over 85,000 businesses had failed. Millions of Americans lost their jobs, their savings and ever their homes. The homeless built shacks for temporary shelter- these emerging shantytowns were nicknamed Hoovervilles; a bitter homage to President Herbert Hoover, who refused to give government assistance to the jobless. The effects of the Depression – severe unemployment rates and a sharp drop in the production and sales of goods- could also be felt abroad, where many European nations still struggled to recover from World War I.

Although the stock market crash of 1929 marked the onset of the depression, it was not the cause of it:  Deep, underlying fissures already existed in the economy of the Roaring Twenties. For example, the tariff and war-debt policies after World War I contributed to the instability of the banking system. American banks made loans to European countries following World War I. However, the United States kept high tariffs on goods imported from other nations. These policies worked against one another. Other countries could not sell goods in the United States; they could not make enough money to pay back their loans or to buy American goods.

And while the United States seemed to be enjoying a prosperous period in the 1920s, the wealth was not evenly distributed. Businesses made gains in productivity but only one segment of the population- the wealthy – reaped large profits. Workers received only a small share of the wealth they helped produce. At the same time, Americans spent more than they earned. Advertising encouraged Americans to buy cars, radios, and household appliances instead of saving or purchasing only what they could afford. Easy credit policies allowed consumers to borrow money and accumulate debt. Investors also wildly speculated on the stock market, often borrowing money on credit to buy shares of a company. Stocks increased beyond their worth, but investors were willing to pay inflated prices because they believed stocks would continue to rise. This bubble burst in the fall of 1929, when investors lost confidence that stock prices would keep rising. As investors sold off stocks, the market spiraled downward. The stock market crash affected the economy in the same way that a stressful event can affect the human body, lowering its resistance to infection.

The ensuring depression led to the election of President Franklin D. Roosevelt in 1932. Roosevelt introduced relief measures that would revive the economy and bring needed relief to Americans suffering the effects of the depression, in his 100 days in office, Roosevelt and Congress passed major legislation that saved banks from closing and regained public confidence. These measures, called the New Deal, included the Agricultural Adjustment Act, which paid farmers to slow their production in order to stabilize food prices; the Federal Deposit Insurance Corporation, which insured bank deposits if banks failed; and the Securities and Exchange Commission, which regulated the stock marker. Although the New Deal offered relief, it did not end the Depression. The economy sagged until the nation entered World War II. However, the New Deal changed the relationship between government and American citizens by expanding the role of the central government in regulating the economy and creating social assistance programs.

11.   The content in the last paragraph of the passage would most likely support which of the following statements?

A.      The new Deal policies were not radical enough in challenging capitalism

B.      The economic policies of the New Deal brought about a complete business recovery

C.      The Agricultural adjustment Act paid farmers to produce surplus crops.

D.      The federal government became more involved in  caring for needy members of society

12.   The author’s main point about the Great Depression is that

A.      Government policies had nothing to do with it.

B.      The government immediately stepped in with assistance for the jobless and homeless

C.      Underlying problems in the economy preceded it.

D.      The new Deal policies introduced by Franklin D. Roosevelt ended it

13.   This passage is best described as

A.      An account of the causes and effects of a major event

B.      A statement supporting the value of federal social policies

C.      A condemnation of outdated beliefs

D.      A polite response to controversial issues

14.    The author cites the emergence of Hoovervilles in paragraph 1 as an example of

A.      Federally sponsored housing programs

B.      The resilience of Americans who lost their jobs, savings and homes

C.      The government’s unwillingness to assist citizens in desperate circumstances.

D.      The effectiveness of the Hoover administration in dealing with the crisis.

15.   The term policies as it is used in paragraph 2, most nearly means

A.      Theories

B.      Practices

C.      Laws

D.      Examples

16.   The passage suggests that the 1920s was a decade that extolled the value of

A.      Thrift

B.      Prudence

C.      Balance

D.      Extravagance

17.   The example of the human body as a metaphor for the economy, which is found at th end of paragraph 3, suggests that

A.      A stressful event like the stock market crash of 1929 probably made a lot of people sick

B.      The crash weakened the economy’s ability to withstand other pressures

C.      The crash was an untreatable disease

D.      A single event caused the collapse of the economy.

Answer:

11.   D   This paragraph clearly states that the New Deal expanded the role of the central government in regulating the economy and creating social assistance programs. Choices b and c are incorrect and choice a requires an opinion; are author does not offer his or her viewpoint about the New Deal measures

12.   C  According to the paragraph 2, deep, underlying fissures that already existed in economy led to the Great Depression.

13.   A   The passage is primarily an account that describes the causative factors (for example, tariff and war- debt policies, disproportionate wealth, and the accumulation of debt) that led to the Depression and its effects (for example, business failures, bank closings, homelessness, federal relief programs).

14.   C paragraph 1 states that shantytowns were called Hoovervilles because citizens blamed their on the Hoover administration’s refusal to offer assistance.

15.   B although policies can refer to regulations or laws (choice c) or guiding principles or theories (Choice a), in this context, policies refers to the courses of action that are taken, from which a government or business intends to influence decisions or actions. Choice b is the only answer that implies action.

16.   D  The passage describes the decade as one in which spending dominated over prudent measures like saving (paragraph 3). The wild stock market speculation, also described in that paragraph, is another example of extravagance.

17.   B   the analogy depicts the stock market crash of 1929 as a weakening agent to the economy (the way a stressful event may weaken the body’s resistance to illness).