Free Market - Boon Or Bane Reading Answers

Jan 25, 2023

Free Market - Boon Or Bane Reading Answers contains sample answers about advantages and disadvantages about the free market. Free Market - Boon Or Bane Reading Answers has 12 different questions. IELTS Free Market - Boon Or Bane Reading Answers contains 3 types of questions: identify the paragraph, complete the sentences and answer the questions. Candidates are required to read the IELTS Reading passage and answer which paragraph contains the given statement. Candidates are supposed to complete the given statements with only one word for each gap from the passage. For the last set of questions, candidates are required to answer the questions using no more than three words from the passage. Candidates can gain proficiency on diverse topics by undertaking IELTS Reading practice papers.

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Section 1

Read the Passage to Answer the Following Questions

Free Market - Boon Or Bane Reading Answers

A free-market economy is defined as the one where production and sale of goods or services can be promoted without any central government agency controlling or involving itself in the process. Pricing in a free market economy is dictated by supply and demand and not by the government.

Pierre-Joseph Proudhon and Benjamin Tucker are some of the early socialist advocates of the free market. There was a strong belief among these economists that free markets could not exist under capitalism where conditions were exploitative. Socialists also felt that free-market capitalism results in a vast disparity in the distribution of income, ultimately leading to social instability.

Economies of a free market are very competitive, leading industries to use their resources astutely and efficiently to make their businesses more profitable. Production by industries will depend entirely on what the consumers want as they have the final say. Businesses, as such, will try to innovate and get ahead of their competitors. The government’s role, though limited, is to protect the intellectual property rights of a person. This acts as an incentive to produce better quality goods. There is a higher economic growth rate in a free market. Although there were times in the U.S. when the country was closer to a true free-market economy, today it’s a mixed economy.

Reports from classical economists say that a free-market economy should arm market players with the knowledge that they are safe as far as monopolies and other market tactics are concerned, thus making their transition into a new enterprise easier. Laissez-faire or ‘let them be’ is a notion that advocates freedom for market players without fear of intervention from government bodies. Milton Friedman’s book ‘Capitalism and Freedom’ published in 1962, identifies with the laissez-faire sentiment. The essential argument that advocates free-market economy comes from Adam Smith’s use of the expression ‘invisible hand’. The argument behind the expression is that when markets have the capability to regulate themselves, external intervention is not necessary.

The free market economy has numerous long-term consequences. These include negative external features such as income inequality which in turn sets the stage for mass unrest that can destabilise the nation. History has shown that when the balance of power, be it administrative or financial, tips in favour of a few rich people, it results in unrest leading to revolutions. Cases in point are the Russian and French revolutions. Working on the assumption that mankind has learnt a lesson from these disasters, most economies today are mixed and are subjected to societal and governmental regulation to varying degrees.

Critics of the free market economy say that there are more chances of failure in an economy which has minimum government regulations. History has demonstrated the failure of new market systems initially. After the Great Depression and the crash of 2008, not only one country but also the whole world was affected. It was a disaster of major proportions when people lost not only their jobs but also their homes. While some were able to get back on their feet, others were not so lucky. Such ensuing periods of recession have needed government intervention to bring it under control. When the economy goes downhill, as was true in the case of the Great Depression of 1930 and the recession of 2008, the government had to step in to help the nation back on its feet. For it to function, the economy needs some government regulation for its smooth functioning. Consequences of market failure are severe.

To suggest that a free-market economy, when compared with other forms, is at best a mediocre form of a market economy, would be impetuous. Several aspects of the policy are positive. Tremendous deliberation is necessary before deciding the type of economy that a nation should adopt. It would not pay to be hasty when making a judgement.

Section 2

Solution and Explanation

Questions 28 - 33

Reading Passage 3 has seven paragraphs ( A-G). Which paragraph contains the following information?

You may use any letter more than once.

reference to impacts of aristocracy in the past

Answer: E
Supporting Sentence: income inequality which in turn sets the stage for mass unrest that can destabilise the nation
Keyword : income, inequality, mass unrest, destabilise
Keyword Location: paragraph E, line 2
Explanation: The free market economy has numerous long-term repercussions, as noted in paragraph E. These include unfavourable external characteristics like income disparity, which can lead to widespread unrest and destabilise the country. History demonstrates that instability eventually leads to revolutions. It occurs when the balance of power, whether it be administrative or financial, swings in the favour of a small group of wealthy individuals.

mention of concepts that support free-market systems

Answer: D
Supporting Sentence: Laissez-faire or ‘let them be’ is a notion that advocates freedom for market players
Keyword : Laissez-faire, notion, advocate, freedom, markey players
Keyword Location: paragraph D, line 4
Explanation: In paragraph D, it is said that laissez-faire, or "letting people be," is a philosophy that promotes market participants' freedom from the threat of government action. In his 1962 book "Capitalism and Freedom," Milton Friedman expressed his laissez-faire philosophy. Adam Smith's usage of the phrase "invisible hand" is the central justification for free-market economics.

a word of caution while fixing on a system

Answer: G
Supporting Sentence: Tremendous deliberation is necessary before deciding the type of economy that a nation should adopt.
Keyword : deliberation, necessary, economy
Keyword Location: paragraph G, line 3
Explanation: Before choosing the type of economy a country should have, a lot of thought must be put into it, as stated in paragraph G. Making a quick decision would not be advantageous.

inherently progressive conditions for a business

Answer: C
Supporting Sentence: very competitive, leading industries to use their resources astutely and efficiently to make their businesses more profitable
Keyword : competitive, industries, resources, efficiently, profitable
Keyword Location: paragraph C, initial lines
Explanation: As per paragraph C, highly competitive economies force enterprises to use their resources wisely and effectively in order to increase profits. As a result, businesses strive to innovate and outperform rivals. The government's duty, while restricted, is to defend an individual's intellectual property rights. This encourages the production of goods of higher quality. In a free market, the rate of economic growth is higher.

the dominant player in a free-market economy

Answer: C
Supporting Sentence: Production by industries will depend entirely on what the consumers want as they have the final say.
Keyword : production, industries, consumers, final say
Keyword Location: paragraph C, line 3
Explanation: The production of goods and services by industries will be totally determined by customer demand, as stated in paragraph C. As a result, businesses strive to innovate and outperform rivals. The government's role in protecting a person's intellectual property rights is limited.

experts express feelings of disagreement

Answer: B
Supporting Sentence: belief among these economists that free markets could not exist under capitalism where conditions were exploitative
Keyword : economists, freemarkets, capitalism, conditions, exploitative
Keyword Location: paragraph B, line 2-3
Explanation: According to paragraph B, these economists had a firm conviction that free markets could not survive in an oppressive capitalism. Socialists believed that a wide discrepancy in the allocation of income under free-market capitalism ultimately ends in social unrest.

Questions 34 - 37

Complete the sentences. Write ONE WORD ONLY from the passage in each gap.

Government monitoring of the economy is imperative to reduce chances of _______ critics opine.

Answer: failure
Supporting Sentence: there are more chances of failure in an economy which has minimum government regulations.
Keyword : chances, economy, minimum, government regulations
Keyword Location: paragraph F, line 1
Explanation: Critics of the free market economy claim that economies have a higher possibility of failing, as is stated in paragraph F. Owing to the little government regulations there.

Extreme effects of failed economies include losing out on _________ as well as shelter.

Answer: jobs
Supporting Sentence: a disaster of major proportions when people lost not only their jobs but also their homes
Keyword : disaster, proportions, people, lost, home
Keyword Location: paragraph F, line 4-5
Explanation: The world as a whole was impacted after the Great Depression and the 2008 financial crisis, as shown in paragraph F. The fact that many people lost both their houses and their jobs was a catastrophe of epic proportions. While some were fortunate enough to stand up again, others were not as fortunate.

The Great Depression and the Recession are examples of a trend in an economy.

Answer: downhill
Supporting Sentence: When the economy goes downhill, as was true in the case of the Great Depression of 1930
Keyword : economy, great depression, 1930
Keyword Location: paragraph F, line 7-8
Explanation: The government had to intervene when the economy faltered in order to assist the country in getting back on its feet, as stated in paragraph F. Similar to how the Great Depression of 1930 and the 2008 recession both occurred.

In spite of the drawbacks, it would be injudicious to call a free market economy.

Answer: mediocre
Supporting Sentence: a free-market economy, when compared with other forms, is at best a mediocre form of a market economy
Keyword : free market, form, compared
Keyword Location: paragraph G, line 1
Explanation: A free-market economy is at best a subpar version of a market economy when compared to other types, as per paragraph G. It would be hasty.

Questions 38 - 40

Answer the questions. Write NO MORE THAN THREE WORDS from the passage in each gap.

Who does NOT play a role in fixing costs in a free market economy?

Answer: government
Supporting Sentence: The government’s role, though limited, is to protect the intellectual property rights of a person.
Keyword : role, limited, protect, property rights
Keyword Location: paragraph C, line 4
Explanation: In paragraph C, it is stated that since customers have the last say, industry production will be fully based on what they want. As a result, businesses strive to innovate and outperform rivals. The government's duty, while restricted, is to defend an individual's intellectual property rights. Therefore, the cost factor is not decided by the government.

What outcome of the free market economy did socialists anticipate?

Answer: social instability
Supporting Sentence: free-market capitalism results in a vast disparity in the distribution of income, ultimately leading to social instability.
Keyword : free market, disparity, distribution, income
Keyword Location: paragraph B, last line
Explanation: As per paragraph B, socialists also believed that free-market capitalism causes a significant disparity in how income is distributed. Ultimately resulting in social instability.

What is the current nature of the American economy?

Answer: mixed economy
Supporting Sentence: there were times in the U.S. when the country was closer to a true free-market economy, today it’s a mixed economy
Keyword : US, free market economy, mixed economy
Keyword Location: paragraph C, last line
Explanation: The greater rate of economic growth in a free market is mentioned in paragraph C. There have been periods when the United States has been closer to a real free-market economy. In contrast, the economy today is mixed.

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