PART III READING COMPREHENSIONS

　　In this section there are four reading passages followed by fifteen multiple-choice questions. Read the passages and then mark your answers on your Answer Sheet.

　　TEXT A Where Have the Good Jobs Gone? Last years economy should have won the Oscar for best picture. Growth in gross domestic product was 4.1 percent; profits soared; exports flourished; and inflation stayed around 3 percent for the third year. So why did so many Americans give the picture a lousy B rating? The answer is jobs. The macroeconomic situation was good, but the microeconomic numbers were not. Yes, 3 million new jobs were there, but not enough of them were permanent, good jobs paying enough to support a family. Jobs insecurity was rampant. Even as they announced higher sales and profits, corporations acted as if they were in a tailspin, cutting 516, 069 jobs in 1994 alone, almost as many as in the recession year of 1991. Yes, unemployment went down. But over one million workers were so discouraged they left the labor force. More than 6 million who wanted full-time work were only partially employed; and another large group was either overqualified or sheltered behind the euphemism of self-employment. We lost a million good manufacturing jobs between 1990 and 1995, continuing the trend that has reduced the blue-collar work force from about 30 percent in the 1950s to about halt that today. White-collar workers found out they were no longer immune. For the fist time, they were let go in numbers virtually equal to those for blue-collar workers. Many resorted to temporary work-with lower pay, fewer benefits and less status. All this in a country where people meeting for the first time say, "What do you do?" Then there is the matter of remuneration. Whatever happened to wage gains four years into a recovery. The Labor Department recently reported that real wages fell 2.3 percent in the 12-month period ending this March. Since 1973, wages adjusted for inflation have declined by about a quarter for high school dropouts, by a sixth for high school graduates and by about 7 percent for those with some college education. Only the wages of college graduates are up, by 5 percent, and recently starting salaries, even for this group, have not kept up with inflation. While the top 5 percent of the population was setting new income records almost every year, poverty rates rose from 11 percent to 15 percent. No wonder this is beginning to be called the Silent Depression. What is going on here? In previous business cycles, companies with rising productivity raised wages to keep labor. Is the historical link between productivity improvements and income growth severed? Of all the reasons given for the wage squeeze —— international competition, technology, deregulation, the decline of unions and defense cuts —— technology is probable the most crucial. It has favored the educated and skilled. Just think that in 1976, 78 percent of auto workers and steelworkers in good mass production jobs were high school dropouts. But these jobs are disappearing fast. Education and job training are what count. These days college graduates can expect to earn 1.9 times the likely earnings of high school graduates, up from 1.45 times in the 1970s. The earning squeeze on middle-class and working-class people and the scarcity of "good, high-paying" jobs will be the big political issue of the 1990s. Americans have so far responded to their falling fortunes by working harder. American males now toil about a week and a half longer than they did in 1973, the first time this century working hours have increased over an extended period of time. Women, particularly in poorer families, are working harder, too. Two-worker families rose by more than 20 percent in the 1980s. Seven million workers hold at least two jobs, the highest proportion in half a century. America is simply not growing fast enough to tighten the labor market and push up real wages. The danger of the information age is that while in the short run it may be cheaper to replace workers with technology, in the long run it is potentially self-destructive because there will not be enough purchasing power to grow the economy. To avoid this dismal prospect, we must get on the virtuous cycle of higher growth and avoid the vicious cycle of retrenchment. Otherwise, an angry, disillusioned and frustrated population —— whose rage today is focused on big government, excess taxes, immigration, welfare and affirmative action —— may someday be brought together by its sense of diminished hopes. Then we will all be in for a very difficult time.

　　36. How many people were partially employed last year?

　　A) 1 million.

　　B) 3 million.

　　C) 6 million.

　　D) 7 million.

　　37. What are the reasons for cut for wages?

　　A) Deregulation, fierce competition, technology.

　　B) International competition, technology, decline of unions, defense cuts, deregulation.

　　C) Loss of manufacturing jobs, international competition, productivity improvements, deregulation.

　　D) Productivity improvement, rise of poverty rates, international competition, technology.

　　38. The scarcity of good jobs in American is because of ____.

　　A) the vicious cycle of retrenchment

　　B) the failure of the government to tighten the labor market

　　C) the threat of information age

　　D) All of above

　　TEXT B Adam Smith and His "Invisible Hand" Theory 　 Adam Smith, the Scottish professor of moral philosophy, was thrilled by his recognition of order in the economic system. His book, the Wealth of Nations (1776), is the germinal book in the field of economics which earned him the title "the father of economics". 　 In Smiths view, a nations wealth was dependent upon production, not agriculture alone. How much it produced, he believed, depended upon how well it combined labor and the other factors of production. The more efficient the combination, the greater the output, and the greater the nations wealth. 　 The essence of Smiths economic philosophy was his belief that an economy would work best if left to function on its own without government regulation. In those circumstances, self-interest would lead business firms to produce only those products that consumers wanted, and to produce them at the lowest possible cost. They would do this, not as a means of benefiting society, but in an effort to outperform their competitors and gain the greatest profit. But all this self interest would benefit society as a whole by providing it with more and better goods and service, at the lowest prices. 　 Smith said in his book: "Every individual endeavors to employ his capital so that its produce may be of greatest value. He generally neither intends to promote the public interest, nor knows how much he is promoting it. He intends only his own security, only his gain. And he is in this led by an invisible hand to promote that which was no part of his intention. By pursuing his own interest he frequently promotes that of society more effectually than when he really intends to promote." 　 The "invisible hand" was Smiths name for the economic forces that we today would call supply and demand, Smith agreed with the physiocrats and their policy of "laissez faire", letting individuals and businesses function without interference from government regulation. In that way the "invisible hand" would be free to guide the economy and maximize production." 　 Smith was very critical of monopolies which restricted the competition that he saw as vital for economic prosperity. He recognized that the virtues of the market mechanism are fully realized only when the checks and balances of perfect competition are present. Perfect competition refers to a market in which no firm or consumer is large enough to affect the market price. The invisible hand theory is about economies in which all the markets are perfectly competitive. In such circumstances, markets will produce an efficient allocation of resources, so that an economy is on its production-possibility frontier. When all industries are subject to the checks and balances of perfect competition, markets can produce an efficient bundle of products with the most efficient techniques and using the minimum against amount of inputs. But when monopolies become pervasive, the remarkable efficiency properties of the invisible economic philosophy?

　　39. What is the pith of Adam Smith's economic philosophy?

　　A) Self-interest is the life-line of economic activities.

　　B) Government shouldn't intervene in the economy.

　　C) Competition will benefit the society for consumers' needs are tended.

　　D) Economic forces should be intended to promote public interest.

　　40. What does the "invisible hand" refer to?

　　A) Supply and demand.

　　B) Laissez faire.

　　C) Self-interest.

　　D) Market mechanism.

　　41. In Smith's view, monopolies ____.

　　A) will lead the economy to cessation

　　B) can hardly realize the checks and balances of competition

　　C) may bring about a vicious circle of high production and low demand

　　D) both A and B

　　42. It can be inferred from the text that ____.

　　A) an efficiency allocation of resources can only be achieved in a free market

　　B) perfect competition can be realized in a free market

　　C) self-interest can help to maximize production and minimize inputs

　　D) both A and B