Problem Solving Practice Test

The following question refers to the information contained in this passage.

The Federal Reserve is the central banking system of the United States. The roles of the Federal Reserve include regulating the monetary policy and supply, preventing financial panics, and supervising banking institutions. The Federal Reserve was created early in the twentieth century primarily in response to the frequent financial panics that would cripple the U.S. economy, most prominent of which was the Panic of 1907. The powers of the Federal Reserve have expanded throughout the years, usually in response to other financial disasters like the Great Depression. Recent evidence suggests the Federal Reserve is essentially powerless to prevent the destabilizing force that is our boom and bust economy.

Why do you think the powers of the Federal Reserve expanded after the Great Depression?

The biggest threat to humanity in the twenty-first century is almost certainly the rising demand for and use of the Earth’s dwindling natural resources. Currently China, and to a slightly lesser extent India, are hurtling through their own Industrial and economic revolutions, powering this change with a greater and greater consumption of natural resources. This transition is already well under way in parts of South America and Africa as well, and will most likely accelerate in the next few decades. Put simply, the planet cannot sustain this growth.

The people of the Western world have lived a privileged life of abundance and materialism for over a hundred years now, and if the whole world wants to live like a middle-class American then the demand for resources will outstrip supply very quickly. What is needed then is a change, a global change, in what is considered an acceptable and sufficient standard living. We all need to downgrade our expectations and our desires, to accept less for the greater good. Human history suggests this is highly unlikely: competition and warfare has always driven our relationships with one another, and it is quite likely that we will fight endless wars over the rights to oil, water, gas, and so on; but, human history also shows a constant trend of human ingenuity prevailing over all manner of natural and man-made disasters, so there is cause for optimism too. We cannot say with certainty which way mankind will go, competition or cooperation; we can only try to do our part and hope for the best.

The author suggests that the solution to the rising demand for resources is                     .