63. The correct answer is (E). Inflation is a rise in prices that is not the result of some increase in the
value of goods purchased. Inflation is said to erode the purchasing power of money. Assume, for
example, that a loaf of bread cost $1.00 last year. If a similar loaf of bread costs $1.10 this year, then
there has been a 10 percent increase in the price of bread that is not the result of some improvement in
the quality of the bread. This is inflation. Most industrialized countries experience some inflation, but
the rate of price increases is not intolerable. When prices rise tremendously in a short period of time,
as described above, the result is runaway inflation. Runaway inflation has disastrous consequences
because wages don’t keep pace with prices. People with relatively fixed incomes, for example, pen-
sions, rental income from long-term leases, and government employees, are particularly hurt. The
social upheaval that followed the runaway inflation after World War I in Germany was one factor in
the rise to power of the Nazis.
64. The correct answer is (E). In the late nineteenth century, the corporation became the most important
form of business organization. The corporation is a legal entity created by a government that is, in effect,
an artificial person. As an artificial person, it enjoys certain advantages over a real person. First, by
selling shares of stock a corporation can raise the money it needs to operate. Second, the individual
investors or shareholders of the company are not personally liable for the debts incurred by the com-
pany. Third, the company can continue to accumulate wealth even after the death of a shareholder.
65. The correct answer is (D). The first artificial satellite to orbit the earth was launched by the Soviet
Union in 1957. The United States followed with Explorer I in 1958.
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