Skill 11

EXERCISE 11: Study each of the passages and choose the best answers to the questions that follow.

PASSAGE ONE (Questions 1-3)

The “piece of eight” was the nickname of the Spanish “peso,” which was the rough equivalent of the American dollar in early America; the peso was accepted coin in much of the Americas, particularly during the period when the stores of Spanish ships were regularly stripped Line by pirates on the waters off the Americas and “redistributed” throughout coastal towns. The (5) nickname “piece of eight” derived from the fact that the peso was equal to eight “reals” and therefore had the numeral 8 stamped on it. The “piece of eight” was sometimes actually cut into pieces, or bits, and one popular size was one-quarter of a “piece of eight,” or two bits. As a consequence, the U.S. quarter of a dollar is sometimes referred to today as two-bits, particularly in the western part of the country. A visitor to that area, if told “It’ll be two-bits,” should take it (10) that the price of an item is being given.


PASSAGE TWO (Questions 4-6)

Although Wealth of Nations by Adam Smith appeared in 1776, it includes many of the ideas that economists still consider the foundation of private enterprise. The ideas put forth by Smith compose the basis of the philosophies of the school of thought called classical economics. Line According to Smith’s ideas, free competition and free trade are vital in fostering the growth (5) of an economy. The role of government in the economy is to ensure the ability of companies to compete freely.

Smith, who was himself a Scot, lived during the period of the revolutions in America and in
France. During this epoch, the predominant political thought was a strong belief in freedom and independence in government. Smith embraced economic ideas of free trade and competition (10) which are right in line with these political ideas.


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