For 200 years until World War-I, French-speaking Wallonia was a technically advanced, industrial region, while Dutch-speaking Flanders was predominantly agricultural. This disparity began to fade during the interwar period. When Belgium emerged from World War-II with its industrial infrastructure relatively undamaged, the stage was set for a period of rapid development, particularly in Flanders. The older, traditional industries of Wallonia, particularly steelmaking, began to lose their competitive edge during this period, but the general growth of world prosperity masked this deterioration until the 1973 and 1979 oil price shocks and resultant shifts in international demand sent the economy into a period of prolonged recession.

In the 1980s and 1990s, the economic center of the country continued to shift northwards to Flanders. The early 1980s saw the country facing a difficult period of structural adjustment caused by declining demand for its traditional products, deteriorating economic performance, and neglected structural reform. Consequently, the 1980-82 recession shook Belgium to its core-unemployment rose, social welfare costs increased, personal debt soared, the government deficit climbed to 13 % of GDP, and the national debt, although mostly held domestically, mushroomed. Against this grim backdrop, in 1982, Prime Minister Martens’ center-right coalition government formulated an economic recovery program to promote export-led growth by enhancing the competitiveness of Belgium's export industries through an $8.5 \%$ devaluation. Economic growth rose from 2 % in 1984 to a peak of 4 % in 1989. In May 1990, the government linked the franc to the German Mark, primarily through closely tracking German interest rates. Consequently, as German interest rates rose after 1990, Belgian rates increased and contributed to a decline in the economic growth rate.

Although Belgium is a wealthy country, it overspent income and under-collected taxes for years. The Belgian government reacted to the 1973 and 1979 oil price hikes with poor macroeconomic policies: it transferred workers made redundant in the private sector to the public sector and subsidized ailing industries-coal, steel, textiles, glass, and shipbuilding-in order to prop up the economy. As a result, cumulative government debt reached 121 % of GNP by the end of the 1980s (versus a cumulative US federal public debt/GNP ratio of 31.2% in 1990). However, thanks to Belgium's high personal savings rate, the Belgian Government managed to finance the deficit mainly from domestic savings. This minimized the deleterious effects on the overall economy.

An appropriate title for this passage might be:

(A) The rise of Flanders to domestic leadership
(B) Managing the challenge of structural adjustment in the post-war Belgian economy
(C) Dead weight: How Greater Belgium lost Flanders the industrial advantage
(D) Fiscal rally: How P.M. Martens found his legs
(E) Which way: Fickle government starves a state with too many choices



The information in the beginning of the passage concerning the rise of Flanders over Wallonia serves to

(A) introduce the protagonist of the author's text early in the passage
(B) foreshadow the counterpoint between successful and unsuccessful policy-making
(C) introduce and demonstrate the idea of a compositional sea-change in the greater Belgian economy
(D) show how runaway development was ready to take hold of the Belgian economy before it was mismanaged and eventually recouped
(E) provide the reader with the factor responsible for driving away development in the greater Belgian economy



Select the sentence in the passage that illustrates one of the reasons that despite the world world wars, Flanders propped Belgian economy toward development.





The phrase "Against this grim backdrop" used by the author to

(A) show that no matter how bad things are, a politician can make them worse
(B) make light of Martens' genuine but misspent efforts to turn around the economy
(C) show that Martens brought real change in the face of a formidable challenge
(D) pardon Martens by showing that even the most expert of handlers could not have changed the hand Belgium was dealt
(E) imply that there was no hope for Belgium



The genre of the passage can be categorized as:

(A) Apologetic
(B) Historical
(C) Polemical
(D) Argumentative
(E) Encyclopedic



In the passage, the author's use of the phrase "poor macroeconomic policies" and the word "prop" in regarding government subsidies suggests what about his opinion of government intervention in the economy?

(A) The government should not intervene in economic issues that can be handle privately.
(B) The government should not support industries that are ailing.
(C) The government can encourage sustainable progress without working with market forces.
(D) The government must be more decisive in its decision-making.
(E) The government cannot avoid being at the mercy of market fluctuations.



The author's critical portrayal of the Belgian government's reactions to the oil crises in the 1970's does not necessarily make its officials economically malfeasant because

(A) no economist could have done better
(B) economists are academics; politicians are pragmatists
(C) this economic review of the Belgian economy is retrospective; the decisions made at the time were without the benefit of hindsight
(D) there are no right or wrong answers in economics
(E) administrators were giving the public what they wanted



Replacement of the word masked highlighted in the first paragraph with which of the following words would result in the LEAST change in meaning in the passage?

(A) concealed
(B) eluded
(C) deceived
(D) perplexed
(E) mystified