Reading Passage Question
As Americans suffered through the first two years of the Great Depression, they attempted to analyze the cause of their troubles and to suggest cures. The fact was, however, that potent remedies appeared to require a radically different approach to public finance and a revolutionary concept of the role of federal government in the time of economic crisis. Herbert Hoover had been elected to office on a platform promising safe, conservative economic programs. It was almost asking too much of him to come up with the imaginative, even radical, leadership that seemed needed to deal with the crisis.
It’s erroneous to think that Hoover did nothing to combat the depression, as some Democrats later tried to make people believe. It’s also fallacious to blame Hoover himself for the depression - in the same way that it is fallacious to dump the responsibility for World Wars I and II into the laps of Wilson and Roosevelt. In any event, Hoover, within the limits of economic orthodoxy and perhaps somewhat beyond, did attempt to restore equilibrium during the depression. Perhaps his sharpest break with tradition was the establishment of the Reconstruction Finance Corporation in January, 1932.
The idea behind the RFC was that the Corporation, capitalized to the tune of a half-billion dollars by the federal government, would make loans to railroads, banks, insurance companies, and other financial institutions in distress. There seems to be little question that for a short time the RFC, by feeding money in at the top, staved off many bankruptcies and prevented more serious losses than otherwise would have occurred. However, by the fall of 1932, this was no longer the case as banks again were tightening credit, deflation ground on - and it was seen that the assistance had been only a passing stimulant. Whatever its value to the economy, many people weren’t happy with the RFC, saying that it helped only the large and powerful. This criticism wasn’t entirely valid after mid-1932, for at that time Hoover pushed through legislation authorizing the RFC to lend $1.8 billion to states, cities, and other government agencies for self liquidating public projects and for direct relief. Even though little evidence existed, the idea persisted in many minds that the RFC was impersonal, and that it cared more about bankers and railroad owners than common folk. Even today, historians continue to debate the role of the RFC in easing the Great Depression and helping everyday people.
“As Americans suffered through the first two years of the Great Depress”- is a GMAT reading comprehension passage with answers. Candidates must have a solid grasp on English GMAT reading comprehension. There are four comprehension questions in this GMAT Reading Comprehension section. GMAT Reading Comprehension questions are designed to evaluate candidates' abilities to comprehend, analyze, and apply information or concepts. Candidates can actively prepare by answering GMAT Reading Comprehension Practice Questions.
Solutions and Explanation
- The author would most likely agree with all of the following except:
(A) A more radical leader than Hoover was needed to properly combat the Great Depression
(B) Leaders should not be automatically blamed for problems during their tenure
(C) The RFC unfairly favored large and powerful institutions.
(D) At least for a short time, the RFC had some positive effect on the economy.
(E) The impact of Hoover’s policies on the Great Depression remain controversial.
Answer: C
Explanation: The statement in the first option appears clearly in the first paragraph, so it is not the right answer. He clearly agrees with the statement in the second option in the second paragraph and so this is not the correct answer. The author also agrees with the statement in the fourth option supported by the last paragraph. The final option is only partially correct and thus cannot be considered. As a result, the third option is the correct answer.
- Which of the following can you logically infer from the passage?
(A) In 1932, the RFC gave more money to states, cities and governmental agencies than it did to financial institutions and railroads.
(B) Credit tightening by financial institutions is a contributing factor to bankruptcy.
(C) The RFC was conceived within the limits of economic orthodoxy.
(D) After mid-1932 railroads received no more assistance from the RFC
(E) The Great Depression would have been much more severe without the implementation of the RFC.
Answer: B
Explanation: Except for the second option, all of the remaining options are incorrect answers. The first option contains distorted data. Because there is no clear basis in the passage, the second and third options are also not right. The final option may appear to be correct, but it is incorrect because the inference is far too broad. The statement in the second option is supported by clear evidence in lines 3-7 of the third paragraph, and it can therefore be clearly inferred.
- Which of the following is the primary purpose of the passage above?
(A) To criticize an important program implemented during the Great Depression
(B) To argue that Herbert Hoover could have done more during the Great Depression
(C) To highlight an unexpected program of Herbert Hoover during the Great Depression
(D) To summarize the implications of a policy that Herbert Hoover instituted during the Great Depression
(E) To analyze Herbert Hover’s legacy during the Great Depression
Answer: C
Explanation: The first option is invalid because the passage's goal was not to criticise the RFC but rather to provide information about Hoover and the RFC. The second option is also incorrect because the purpose of the passage is to present. Some information with a subtly embedded tone rather than to argue anything. The fourth option is rejected because the implications of the RFC are not summarised. The final option is far too broad. Finally, the third option is the correct answer.
- The author most probably believes which of the following about Herbert Hoover’s policies during the Great Depression:
(A) They were a complete failure
(B) They were helpful in leading the U.S. out of the depression
(C) They were better than is generally believed
(D) They did not directly benefit the “common folk”
(E) They were poorly received by all Democrats
Answer: C
Explanation: The first option is not a correct answer, because the author thought Hoover did some things well. The second option is also not the correct answer because it lacks clear evidence. The fourth option is also an incorrect choice because it contains a contradictory statement. The final option is too far-fetched. As a result, the third option is the correct response.
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