While there is no blueprint for transforming a largely government-controlled economy into a free one, the experience of the United Kingdom since 1979 clearly shows one approach that works: privatization, in which (5) state-owned industries are sold to private companies. By 1979, the total borrowings and losses of state-owned industries were running at about t3 billion a year. By selling many of these industries, the government has decreased these borrowings and losses, gained over t34 (10) billion from the sales, and now receives tax revenues from the newly privatized companies. Along with a dramatically improved overall economy, the government has been able to repay 12.5 percent of the net national debt over a two-year period.

  1. According to the passage, all of the following were benefits of privatizing state-owned industries in the United Kingdom EXCEPT:

  (A) Privatized industries paid taxes to the government.

  (B) The government gained revenue from selling state- owned industries.

  (C) The government repaid some of its national debt.

  (D) Profits from industries that were still state-owned increased.

  (E) Total borrowings and losses of state-owned industries decreased.

  2. According to the passage, which of the following resulted in increased productivity in companies that have been privatized?

  (A) A large number of employees chose to purchase shares in their companies.

  (B) Free shares were widely distributed to individual shareholders.

  (C) The government ceased to regulate major industries.

  (D) Unions conducted wage negotiations for employees.

  (E) Employee-owners agreed to have their wages lowered.

  3. It can be inferred from the passage that the author considers labor disruptions to be

  (A) an inevitable problem in a weak national economy

  (B) a positive sign of employee concern about a company

  (C) a predictor of employee reactions to a company's offer to sell shares to them

  (D) a phenomenon found more often in state-owned industries than in private companies

  (E) a deterrence to high performance levels in an industry