Question

From Address to the Nation on the Economy, 1981

by Ronald Reagan

And finally there are 7 million Americans caught up in the personal indignity and human tragedy of unemployment. If they stood in a line, allowing 3 feet for each person, the line would reach from the coast of Maine to California.
Well, so much for the audit itself. Let me try to put this in personal terms. Here is a dollar such as you earned, spent, or saved in 1960. And here is a quarter, a dime, and a penny—36 cents. That's what this 1960 dollar is worth today. And if the present world inflation rate should continue 3 more years, that dollar of 1960 will be worth a quarter. What initiative is there to save? And if we don't save we're short of the investment capital needed for business and industry expansion. Workers in Japan and West Germany save several times the percentage of their income than Americans do.
What's happened to that American dream of owning a home? Only 10 years ago a family could buy a home, and the monthly payment averaged little more than a quarter—27 cents out of each dollar earned. Today, it takes 42 cents out of every dollar of income. So, fewer than 1 out of 11 families can afford to buy their first new home.
Regulations adopted by government with the best of intentions have added $666 to the cost of an automobile. It is estimated that altogether regulations of every kind, on shopkeepers, farmers, and major industries, add $100 billion or more to the cost of the goods and services we buy. And then another 20 billion is spent by government handling the paperwork created by those regulations.

Passage 2

from Address to the Nation on the Economic Crisis, 2008
by George W. Bush

This large influx of money to U.S. banks and financial institutions, along with low interest rates, made it easier for Americans to get credit. These developments allowed more families to borrow money for cars, and homes, and college tuition, some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.
Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.
Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.
Optimism about housing values also led to a boom in home construction. Eventually, the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell, and this created a problem.
Borrowers with adjustable-rate mortgages, who had been planning to sell or refinance their homes at a higher price, were stuck with homes worth less than expected, along with mortgage payments they could not afford.
As a result, many mortgage-holders began to default. These widespread defaults had effects far beyond the housing market.
1
Select the correct answer.
What conclusion can the reader draw from both texts?

A.
The speech made by Ronald Reagan directly forecasted the market problems that occurred in 2008.
B.
Economic problems are often a result of poor spending habits on the part of businesses.
C.
The economy'

s stability is not necessarily reflected in one's ability to purchase material goods.
D.
Economic instability is a subjective idea that must be reassessed by multiple experts.

Answer 1

Both Ronald Reagan and George W. Bush's speeches convey that economic stability is essential for maintaining the purchasing power and well-being of individuals. They highlight the various factors, including government policies and market assumptions, that can lead to financial hardship.

When analyzing the speeches by Ronald Reagan and George W. Bush, it becomes clear that economic instability can have severe impacts on people's ability to achieve and sustain material prosperity, which is evident in the difficulties of purchasing homes and sustaining employment.

Both presidents address the causes and consequences of economic stress during their tenure - Reagan with the devaluation of the dollar and high interest rates, and Bush with the credit crisis leading to the housing market crash. What can be concluded from both texts is that the economy's stability is crucial for individuals' material well-being but is often impacted by a variety of factors, including government policies and market behaviors.

Reagan's speech does not directly predict the market problems of 2008 but highlights the precursors to financial difficulties, such as inflation and regulation costs. Bush's address focuses on the immediate effects of excessive credit and the assumption of ever-rising home values, resulting in a market crash.

Both addresses highlight the vulnerabilities in the economy that can lead to hardships for the average citizen, culminating in the conclusion that economic stability is significant for purchasing power and material goods (Option C).