Question

use the following information for questions 7 through 12
the great depression, which began with the stock market crash of 1929, was caused partially by the
conservative economic philosophy of laissez - faire (\leave it alone\), which had allowed markets to
operate without government interference. before the crash, the government had done nothing to
regulate banking, investments, or other basic aspects of the economy. the government had also failed
to gather adequate data that could have been analyzed to highlight growing problems in stock market
investing, agriculture, or other vital sectors of the economy, leading up to the crash.
in 1933, in response to record unemployment brought about by the great depression, newly elected
president roosevelt introduced a domestic program (enacted between 1933 and 1939) that vastly
increased the scope of the federal government’s activities in the economy. the new program, known
as the new deal, took action to bring about immediate relief to reduce the suffering of unemployed
workers and imposed reforms in industry, agriculture, finance, water power, labor, and housing.
perhaps the most far - reaching programs of the entire new deal were those associated with social
security, which provided old - age and widows’ benefits, unemployment compensation, and disability
insurance.
page 3 of 12
the following figure shows the unemployment rate from 1930 through 1945.
u.s. unemployment rate, 1930 - 1945
30%
25%
20%
15%
10%
5%
0%
1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945

1. what is meant by laissez - faire economics?

a. the government plays a significant role in the economy by imposing restrictions on odious
business practices.
b. the government controls every aspect of the economy and owns all major industries.
c. the government allows the free market to determine economic outcomes without interfering.
d. laissez - faire economics was the name of one of the programs in roosevelt’s new deal.

1. according to the passage, what was at least partially responsible for causing the stock market crash of

1929?
a. laissez - faire economics
b. too many government restrictions
c. the great depression
d. roosevelt’s new deal

1. the social security programs of the new deal provided all of the following except

a. unemployment compensation.
b. disability insurance.
c. free housing.
d. old - age and widows’ benefits.

Explanation:

Question 7

The passage says laissez - faire means "leave it alone", so the government lets the free market work without interference. Option A says government imposes restrictions, which is opposite. Option B is a command economy, not laissez - faire. Option D is wrong as New Deal was after the crash and laissez - faire was pre - crash economic philosophy.

The passage states "The Great Depression, which began with the Stock Market Crash of 1929, was caused partially by the conservative economic philosophy of laissez - faire". Option B is wrong as laissez - faire is no government restrictions. Option C is the result of the crash, not the cause. Option D was introduced after the crash.

The passage says Social Security "provided old - age and widows’ benefits, unemployment compensation, and disability insurance". Free housing is not mentioned as part of Social Security programs.

Answer:

C. The government allows the free market to determine economic outcomes without interfering.

Question 8