Question

when reagan took office, he brought with him a new economic philosophy. with the guidance of his economic advisors, he tried to stimulate the economy. to do this, his administration cut taxes and invested government money in job - creation programs. it seemed to work. in the eight years that reagan was president, the unemployment rate fell from 7.5 percent to 5.4 percent. during that same period, inflation dropped from 12.5 percent to 4.4 percent. which of these economic concerns was related to the achievements described in the passage?

• “baby boomers” did not want the jobs that had been created by government.
• reagan “froze” wages and prices to accomplish this economic recovery.
• inflation and unemployment rates declined, but stagflation did not.
• the nation’s deficit rose greatly as inflation and unemployment fell.

Explanation:

1. Analyze Option 1: The passage doesn't mention baby boomers' job preferences, so this is incorrect.
2. Analyze Option 2: Reagan's economic approach was tax cuts and job - creation, not wage - price freezes (that was more associated with earlier policies like Nixon's), so this is wrong.
3. Analyze Option 3: The passage shows inflation and unemployment declined, and stagflation (high inflation + high unemployment) would be alleviated with these declines, so this is incorrect.
4. Analyze Option 4: Reagan's policies (tax cuts, government spending on jobs) increased government spending and reduced revenue (from tax cuts), so the deficit would rise as inflation and unemployment fell, which matches the economic concern related to his achievements.

Answer:

D. The nation's deficit rose greatly as inflation and unemployment fell.