The fall of the Berlin Wall represented a political victory
of the free market against a centrally planned economy.
Though highly interventionist and dependent on
international defense and industrial subsidy, West Germany
was a model of economic expansion in the post-war era.
East Germany, while relatively successful in comparison
with other Eastern Bloc nations, was far behind West
Germany with regard to the buying power of its people. It
was hard to avoid obvious comparisons such as the fact
that 1 in 4 East Germans did not even have an indoor
toilet. Western German authorities were therefore
committed to rapid integration of the two Germanys
without resorting to massive controls on internal
migration, external capital controls, or continuation of a
large state-owned industrial sector.
Other nations were already wary of a united Germany.
France, a perpetual competitor, saw Germany’s size
advantage increase overnight. In Gross Domestic Product
(“GDP”) alone, an historical size advantage of 23% jumped
to nearly 30%, with stronger growth promised when East
Germany was fully integrated.
Within Germany, there should have been no doubt that
integration would be costly. The question was whether
the government was up to the task. In Italy, for example,
the central government has invested tremendous
resources in promoting the economy of its under-
performing Southern region. In contrast, in the United
States, the local population bears the burden of varying
economic performance. For example, the American South
is allowed to exist with much higher rates of poverty and
lower education than the rest of the nation.
Rather than allow East Germany to fall into total disrepair,
with millions fleeing to the West and a long-term negative
impact on national GDP growth, West German authorities
decided to try to spend their way out of the crisis, creating
almost overnight an infrastructure in East Germany to
provide a standard of living comparable to that in West
Germany. The goal was to take an under-performing
country and raise it to “first world” standards in only a
few years. This goal would have been preposterous had
not West Germany possessed the resources to accomplish
the task.
1. According to the author, which of the following is the
principal reason that German reunification could
succeed?
· The additional population from East Germany gave
the reunified Germany an economic advantage over
other European nations.
· East Germany had not been as impoverished as other
Eastern Bloc countries.
· West Germany did not plan to control internal
migration from East Germany.
· West Germany patterned its economic plan after a
successful Italian model.
· West Germany was a materially stable country.
2. The author mentions the United States most probably
in order to
· argue against a commonly held belief about market
economies
· provide an example of a situation seen as undesirable
· suggest an advantageous solution to an economic
problem
· illustrate an economic principle called into question
· demonstrate the positive consequences of economic
freedom
3. Which of the following best describes the way the
first paragraph functions in the context of the
passage?
· A specific example is presented to illustrate the main
elements of a general economic theory.
· Evidence is presented in support of a revision of a
commonly held view.
· Information that is necessary for understanding the
main argument of the passage is presented.
· Questions are raised which are answered in
subsequent paragraphs.
· A qualified view of the author’s main point is
contrasted with a less specific view.
4. The passage suggests which of the following about
the relationship between West Germany and France?
· Historically, the economy of West Germany had been
more stable than that of France.
· The Gross Domestic Product of West Germany had
always been greater than that of France.
· The size of West Germany’s population gave it an
advantage over France in international trade.
· France did not view its economic position relative to
West Germany as immutable.
· West Germany planned to use reunification to bolster
its economic advantage over France.![]()
of the free market against a centrally planned economy.
Though highly interventionist and dependent on
international defense and industrial subsidy, West Germany
was a model of economic expansion in the post-war era.
East Germany, while relatively successful in comparison
with other Eastern Bloc nations, was far behind West
Germany with regard to the buying power of its people. It
was hard to avoid obvious comparisons such as the fact
that 1 in 4 East Germans did not even have an indoor
toilet. Western German authorities were therefore
committed to rapid integration of the two Germanys
without resorting to massive controls on internal
migration, external capital controls, or continuation of a
large state-owned industrial sector.
Other nations were already wary of a united Germany.
France, a perpetual competitor, saw Germany’s size
advantage increase overnight. In Gross Domestic Product
(“GDP”) alone, an historical size advantage of 23% jumped
to nearly 30%, with stronger growth promised when East
Germany was fully integrated.
Within Germany, there should have been no doubt that
integration would be costly. The question was whether
the government was up to the task. In Italy, for example,
the central government has invested tremendous
resources in promoting the economy of its under-
performing Southern region. In contrast, in the United
States, the local population bears the burden of varying
economic performance. For example, the American South
is allowed to exist with much higher rates of poverty and
lower education than the rest of the nation.
Rather than allow East Germany to fall into total disrepair,
with millions fleeing to the West and a long-term negative
impact on national GDP growth, West German authorities
decided to try to spend their way out of the crisis, creating
almost overnight an infrastructure in East Germany to
provide a standard of living comparable to that in West
Germany. The goal was to take an under-performing
country and raise it to “first world” standards in only a
few years. This goal would have been preposterous had
not West Germany possessed the resources to accomplish
the task.
1. According to the author, which of the following is the
principal reason that German reunification could
succeed?
· The additional population from East Germany gave
the reunified Germany an economic advantage over
other European nations.
· East Germany had not been as impoverished as other
Eastern Bloc countries.
· West Germany did not plan to control internal
migration from East Germany.
· West Germany patterned its economic plan after a
successful Italian model.
· West Germany was a materially stable country.
2. The author mentions the United States most probably
in order to
· argue against a commonly held belief about market
economies
· provide an example of a situation seen as undesirable
· suggest an advantageous solution to an economic
problem
· illustrate an economic principle called into question
· demonstrate the positive consequences of economic
freedom
3. Which of the following best describes the way the
first paragraph functions in the context of the
passage?
· A specific example is presented to illustrate the main
elements of a general economic theory.
· Evidence is presented in support of a revision of a
commonly held view.
· Information that is necessary for understanding the
main argument of the passage is presented.
· Questions are raised which are answered in
subsequent paragraphs.
· A qualified view of the author’s main point is
contrasted with a less specific view.
4. The passage suggests which of the following about
the relationship between West Germany and France?
· Historically, the economy of West Germany had been
more stable than that of France.
· The Gross Domestic Product of West Germany had
always been greater than that of France.
· The size of West Germany’s population gave it an
advantage over France in international trade.
· France did not view its economic position relative to
West Germany as immutable.
· West Germany planned to use reunification to bolster
its economic advantage over France.