Franklin Delano Roosevelt’s New Deal was Hotly Debated at the Time it GMAT Reading Comprehension

Reading Passage Question

Franklin Delano Roosevelt’s New Deal was hotly debated at the time it was instituted, and amazingly, it is still a sensitive topic for ideologues on the left and right today. Whether Roosevelt’s overhauling of the economy brought the U.S. out of the Great Depression or prolonged it, as some believe, there is little disagreement as to the magnifying effect that his policies had on the ability and propensity of the federal government to involve itself in the nation’s economic affairs, by legislative means or by direct expenditures. New Deal emergency relief programs gave the government control over labor laws, transportation regulations, and farming methods, not to mention criminal law and even social welfare. Prior to the New Deal, banks were regulated by the states, though the Federal Reserve Bank, sometimes referred to as a decentralized central bank, was in place by 1913.

Any wartime effort is sure to increase federal power, and World War II solidified the expectation that the executive branch in particular could, for better or worse, have a large hand in controlling economic and business policy. The bond between the military and the industrial sector, which had been so important in winning the war, gave rise to what President Eisenhower called, with some foreboding, the military-industrial complex. When John Kennedy took office during economically promising times, he announced his New Frontier program, now often remembered for its boosterism of the space program, but which also gave the government added powers to negotiate tariff reductions and take part in multinational trade negotiations. Amendments to the Fair Labor Standards Act increased both the minimum wage and the number of workers in the retail sector that were to be covered. An ambitious housing bill increased the government’s involvement in authorizing mortgages for home rehabilitation and providing grants for urban renewal.

Though the expansion of federal economic activism has been associated with Democrats since the time of Roosevelt, Republican Richard Nixon did not shy from federal involvement in non-emergency economic issues. It wasn’t until the presidency of Ronald Reagan that an attempt was made to scale back government influence in economic and business affairs so that the famous—and debatable—“invisible hand” of capitalism could guide the economy and promote social good.

“Franklin Delano Roosevelt’s New Deal was Hotly Debated at the Time it” - is a GMAT reading comprehension passage with answers. Nominees must have a firm understanding of English GMAT reading comprehension. There are 4 comprehension questions in this GMAT Reading Comprehension section. GMAT Reading Comprehension questions are conducted to examine candidates' skills to decipher, interpret, and utilize knowledge or ideas. Candidates can actively prepare by answering GMAT Reading Comprehension Practice Questions.

Solutions and Explanation

1. Which of the following is the most appropriate title of the passage?

(A) How the New Deal Increased Federal Spending
(B) The Economic and Social Impact of Executive Branch Spending
(C) The New Deal’s Legacy of Federal Economic Activism
(D) Government Control of Monetary Policy Since the New Deal
(E) The Path from Government Activism to the Invisible Hand

2. It can be inferred from the passage that the New Deal _______.

(A) turned regulation of the banks over to the federal government
(B) created the Federal Reserve Bank as a means of gaining more control over economic policy
(C) was responsible for the federal government’s first attempt at directly promoting social welfare programs
(D) came to an end with the start of World War II
(E) was unpopular with labor leaders whose actions were increasingly overseen by the executive branch of the government

3. According to the passage, which of the following was NOT necessarily true of the New Frontier?

(A) It addressed the need for loans with which to improve housing.
(B) It gave the federal government a larger role to play in some global affairs.
(C) It was enacted during a time when the future of the economy looked bright.
(D) It was instrumental in creating the Fair Labor Standards Act.
(E) It guaranteed wages for a greater number of people.

4. It can be inferred from the passage that federal involvement in business affairs_______.

(A) became associated with Republicans after Richard Nixon took office
(B) was discouraged by those who believed that the “invisible hand” of capitalism would produce non-economic benefits
(C) was responsible for the creation of a so-called “military-industrial” complex
(D) was never the intent of the New Frontier, though it was essential to the implementation of the New Deal
(E) is most effective when it is reserved for economic emergencies such as those created by the Great Depression

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