OG Test 2 - Reading 2

Questions 11-21 are based on the following passage.

This passage is adapted from Iain King, “Can Economics Be Ethical?”©2013 by Prospect Publishing.
Recent debates about the economy have
rediscovered the question, "is that right?", where
"right" means more than just profits or efficiency.
LineSome argue that because the free markets allow
5for personal choice , they are already ethical. Others
have accepted the ethical critique and embraced
corporate social responsibility. But before we can
label any market outcome as" immoral," or sneer at
economists who try to put a price on being ethical,
10we need to be clear on what we are talking about.
There are different views on where ethics should
apply when someone makes an economic decision.
Consider Adam Smith, widely regarded as the
founder of modern economics. He was a moral
15philosopher who believed sympathy for others was
the basis for ethics (we would call it empathy
nowadays). But one of his key insights in The Wealth
of Nations was that acting on this empathy could be
counter-productive -he observed people becoming
20better off when they put their own empathy aside,
and interacted in a self-interested way. Smith justifies
selfish behavior by the outcome. Whenever planners
use cost-benefit analysis to justify a new railway line,
or someone retrains to boost his or her earning
25power, or a shopper buys one to get one free, they are
using the same approach: empathizing with
someone, and seeking an outcome that makes that
person as well off as possible-although the person
they are empathizing with may be themselves in the
Instead of judging consequences, Aristotle
said ethics was about having the right
character-displaying virtues like courage and
honesty. It is a view put into practice whenever
35business leaders are chosen for their good character.
But it is a hard philosophy to teach-just how much
loyalty should you show to a manufacturer that keeps
losing money ? Show too little and you`re a" greed is
good" corporate raider; too much and you`re wasting
40money on unproductive capital. Aristotle thought
there was a golden mean between the two extremes,
and finding it was a matter of fine judgment. But if
ethics is about character, it`s not clear what those
characteristics should be.
45There is yet another approach : instead of rooting
ethics in character or the consequences of actions, we
can focus on our actions themselves. From this
perspective some things are right, some wrong-we
should buy fair trade goods, we shouldn`t tell lies in
50advertisements . Ethics becomes a list of
commandments, a catalog of "dos" and "don`ts."
When a finance official refuses to devalue a currency
because they have promised not to, they are defining
ethics this way. According to this approach
55devaluation can still be bad, even if it would make
everybody better off.
Many moral dilemmas arise when these three
versions pull in different directions but clashes are
not inevitable. Take fair trade coffee (coffee that is
60sold with a certification that indicates the farmers
and workers who produced it were paid a fair wage),
for example: buying it might have good
consequences ,be virtuous, and also be the right way
to act in a flawed market. Common ground like this
65suggests that, even without agreement on where
ethics applies, ethical economics is still possible.
Whenever we feel queasy about "perfect"
competitive markets, the problem is often rooted in a
phony conception of people. The model of man on
70which classical economics is based-an entirely
rational and selfish being-is a parody, as
John Stuart Mill, the philosopher who pioneered the
model, accepted. Most people-even economists-
now accept that this" economic man " is a fiction.
75We behave like a herd; we fear losses more than we
hope for gains; rarely can our brains process all the
relevant facts.
These human quirks mean we can never make
purely "rational" decisions. A new wave of behavioral
80economists , aided by neuroscientists ,is trying to
understand our psychology, both alone and in
groups ,so the can anticipate our decisions in the
market place more accurately. But psychology can
also help us understand why we react in disgust at
85economic injustice, or accept a moral law as
universal. Which means that the relatively new
science of human behavior might also define ethics
for us. Ethical economics would then emerge from
one of the least likely places: economists themselves.

Question 11

The main purpose of the passage is to

  • A consider an ethical dilemma posed by cost-benefit analysis.

  • B describe a psychology study of ethical economic behavior.

  • C argue that the free market prohibits ethical economics.

  • D examine ways of evaluating the ethics of economics.

Question 12

In the passage, the author anticipates which of the following objections to criticizing the ethics of free markets?

  • A Smith`s association of free markets with ethical behavior still applies today.

  • B Free markets are the best way to generate high profits, so ethics are a secondary consideration.

  • C Free markets are ethical because they are made possible by devalued currency.

  • D Free markets are ethical because they enable individuals to make choices.

Question 13

Which choice provides the best evidence for the answer to the previous question?

  • A Line4-5("Some...ethical")

  • B Lines7-10("But...about")

  • C Lines21-22("Smith...outcome")

  • D Lines52-54("When...way")

Question 14

As used in line 6,"embraced" most nearly means

  • A lovingly held.

  • B readily adopted.

  • C eagerly hugged.

  • D reluctantly used.

Question 15

The main purpose of the fifth paragraph(lines 45-56) is to

  • A develop a counterargument to the claim that greed is good.

  • B provide support for the idea that ethics is about character.

  • C describe a third approach to defining ethical economics.

  • D illustrate that one`s actions area result of one`s character.

Question 16

As used in line 58,"clashes" most nearly means

  • A conflicts.

  • B mismatches.

  • C collisions.

  • D brawls.

Question 17

Which choice best supports the author`s claim that there is common ground shared by the different approaches to ethics described in the passage?

  • A Lines 11-12("There...decision")

  • B Lines 47-50("From...advertisements")

  • C Lines 59-64("Take...market")

  • D Lines 75-77("We...facts")

Question 18

The main idea of the final paragraph is that

  • A human quirks make it difficult to predict people`s ethical decisions accurately.

  • B people universally react with disgust when faced with economic injustice.

  • C understanding human psychology may help to define ethics in economics.

  • D economists themselves will be responsible for reforming the free market.

Question 19

Data in the graph about per-pound coffee profits in Tanzania most strongly support which of the following statements?

  • A Fair trade coffee consistently earned greater profits than regular coffee earned.

  • B The profits earned from regular coffee did not fluctuate.

  • C Fair trade coffee profits increased between 2004 and 2006.

  • D Fair trade and regular coffee were earning equal profits by 2008.

Question 20

Data in the graph indicate that the greatest difference between per-pound profits from fair trade coffee and those from regular coffee occurred during which period?

  • A 2000 to 2002

  • B 2002 to 2004

  • C 2004 to 2005

  • D 2006 to 2008

Question 21

Data in the graph provide most direct support for which idea in the passage?

  • A Acting on empathy can be counterproductive.

  • B Ethical economics is defined by character.

  • C Ethical economics is still possible.

  • D People fear losses more than they hope for gains.


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