Examkin

Question

Difficulty: MediumEconomics in the Global Age

"For decades, our government maintained tight control over key sectors of the economy, subsidizing basic necessities and protecting domestic industries from foreign competition. However, the debt crises of the preceding decade forced a major redirection. Under the guidance of international lending institutions, we have lowered tariffs, privatized state-owned utilities, and encouraged foreign corporations to invest. While these measures have stabilized our currency and increased trade, they have also resulted in deep cuts to social welfare programs and sparked public protests."

—Report by the Ministry of Finance of a Latin American nation, 1996

The economic policies described in the passage are most representative of which of the following global developments in the late twentieth century?

  1. A
    The adoption of Marxist-Leninist strategies to redistribute wealth to the working class.
  2. The spread of neoliberal economic principles that promoted free markets and privatization.Answer
  3. C
    The resurgence of mercantilist economic policies to maximize national trade surpluses.
  4. D
    The establishment of direct colonial administration by Western nations to secure resources.

Answer

The spread of neoliberal economic principles that promoted free markets and privatization.
The correct answer is correct because the economic reforms detailed in the passage—including lowering tariffs, privatizing utilities, and welcoming foreign investment—are defining features of the global spread of neoliberalism in the late twentieth century.

Step-by-Step Solution

1
Analyze the stimulus document to identify the key economic actions described.
The report outlines measures such as lowering tariffs, privatizing utilities, encouraging foreign investment, and reducing social welfare spending.
Identifying the specific economic policies helps classify the economic model described in the source.
2
Contextualize these policies within global economic trends of the late twentieth century.
These free-market, deregulation, and privatization policies match the rise of neoliberalism promoted by global financial institutions in the 1980s and 1990s.
Placing the source in its historical context allows the student to link local reforms to broader global patterns.
3
Evaluate the options to select the trend that aligns with the analysis.
The option describing the spread of neoliberal economic principles fits the evidence, while options relating to mercantilism, Marxism-Leninism, or direct colonial rule represent incorrect historical concepts for this period.
Eliminating options based on historical definitions confirms the correct choice.

Key Concept

The global spread of free-market and neoliberal economic policies in the late twentieth century.
Rate this question

Topics

Economics in the Global Age

More questions from this topic