The Wall Street Journal Weekly Quiz · Web viewUS Airways Group Inc.'s $8.67 billion hostile takeover bid for Delta Air Lines suggests that the long-predicted frenzy of consolidation

The Wall Street Journal Education Program Weekly Review & QuizCovering front-page articles from Nov 11 - 17, 2006Professor Guide with Summaries Fall 2006Developed by: Scott R. Homan Ph.D., Purdue University

Questions 1 – 12 from The First Section, Section A

Democratic Gains Raise Roadblocks To Free-Trade PushBy GREG HITT and NEIL KING, JR.November 11, 2006; Page A1http://online.wsj.com/article/SB116321182770520568.html

WASHINGTON -- The Democrats' sweep of Congress is set to deliver a blow to President Bush's free-trade ambitions and could hamper impending trade deals both big and small.Democrats' stances against free trade helped build the party's success at the polls and could tip the balance on trade matters. The new dynamic could put a definitive end to the already troubled effort to reach a global agreement to reduce tariffs and open markets, known as the Doha round. It also could put in jeopardy smaller deals such as those the U.S. has crafted with Peru and Colombia, intended to boost two-way trade by lowering tariffs and increasing intellectual-property protections.Two dozen tightly contested races turned partly on Democrats' protectionist platforms, according to Public Citizen, a liberal advocacy group. All told, 16 incoming "trade skeptics" are set to replace "trade friendly" Republicans in the House, according to a study by the Swiss Institute for International Economics at the University of St. Gallen. Five new Senate Democrats are viewed as more critical on trade than were their opponents."The House and Senate are going to exert themselves on trade much more aggressively," vows Ohio Democrat Sherrod Brown, whose successful campaign against free-trade Republican Sen. Mike DeWine was built on opposition to the Bush trade agenda. In one television advertisement he stood before an abandoned local factory, contending Mr. DeWine had supported trade agreements that cost the state jobs. "Congress has given too much of its authority to the president," he says. "We've just ceded our power."A lame-duck session of the current Congress is set to vote as early as next week on whether to lift Cold War-era economic restrictions on Vietnam, which has just joined the World Trade Organization, and grant it the same benefits as other U.S. trading partners. That vote is expected to pass easily, despite some opposition in the textile industry.After that, Democrats are gearing up for a major pushback against the Bush administration on other trade fronts, most notably on a vote next year on whether to renew the president's authority to negotiate trade deals with other countries, without amendment from Congress. That authority expires in the summer.

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The U.S. in the past 20 years has championed global and regional trade deals that have significantly lowered tariffs and have helped spur a boom in global trade. Advocates assert that the U.S. would benefit from more liberalization, both to bring in lower-cost imports and to increase exports. Opponents argue lowering trade barriers has hollowed out the U.S. manufacturing base and done lasting harm to many pockets of the economy.Special presidential trade-negotiating authority, often called "fast track," is critical to getting deals done. Other countries are reluctant to negotiate with the U.S. if there is a chance the deals could be changed by Congress instead of just approved or rejected. Democratic critics have long complained that the Republican Congress gave too much negotiating latitude to Mr. Bush and want to rein the president in.Trade experts say Democrats may try to exact concessions from President Bush that would render a deal on fast-track nearly impossible. For instance, some Democrats have suggested significantly increasing the $1 billion the government gives yearly to workers displaced by foreign competition. Others are proposing compromises such as limiting fast-track authority only to the Doha talks.Some business officials expressed cautious optimism that trade liberalization won't grind to a halt in the next Congress. "The trade agenda may change, may be done in a different way, but it isn't going to end altogether," says Bill Miller, a congressional liaison for the U.S. Chamber of Commerce. He and others said past Republican dismissiveness of Democratic concerns on recent trade legislation -- such as labor rights and environmental protection in recent trade bills -- may have stirred some of the deepest opposition. A more cooperative environment could make a difference, they said.Charlene Barshefsky, President Clinton's trade representative, agrees, predicting Democrats could show real cooperation to try to secure the Doha round. "I see tougher sailing ahead, but not necessarily history-altering events," she said.The first test may be the U.S.'s proposed trade pact with Peru, which the Bush administration had hoped would be voted on this fall, before the new Congress is sworn in. Many Democrats oppose the deal, including Rep. Charles Rangel, a New York Democrat who is poised to take over the House Ways and Means Committee. Mr. Rangel wants labor protections to be included. Though no final decisions have been made, Republican leaders are wary of bringing the deal forward for a vote, especially after the signal sent by Tuesday's vote.Even in states that historically have rejected anti-free-trade campaigns, such as Iowa, Kansas and Missouri, candidates who ran heavily on such a platform won. While the dominant themes of the campaign were Iraq, terror and scandal, there were plenty of signs that economic insecurity was coloring voters' decisions.In exit polls, half of voters said they felt the "state of the national economy" was "not so good," or "poor." Economic concerns were particularly big in the industrial Midwest, where free-trade critics won some of their biggest gains and voters in some states put economic concerns first.Mr. Rangel said he wants to renew the president's fast-track authority but that the president would need to consider Democratic priorities in return. Extending the authority depends on whether Mr. Bush "wants both parties to participate in discussions," Mr. Rangel said in an interview before the election.After the new Congress is seated in January, Democrats are all but certain to seek modifications to a trade deal with Columbia. As with the Peru deal, they are likely to


push for stronger language on worker protections. Both pacts would give them their first real opportunity to wrangle more concessions in an area over which their party and Republicans have been fighting for years.Another big issue is agriculture: Congress next year must either renew or rewrite the current farm bill, a huge mass of legislation that covers all U.S. farm policy, including subsidies. The biggest sticking point within the Doha round is the big subsidies the Europeans, Japanese and U.S. give to support farmers. Developing countries argue these payments distort the export market.

1. Special presidential trade-negotiating authority, often called ______ is critical to getting deals done.a. “speedy track”b. “easy track”c. "fast track" Correctd. “free track”

2. All told, ______ incoming "trade skeptics" are set to replace "trade friendly" Republicans in the House, according to a study by the Swiss Institute for International Economics at the University of St. Gallen.a. 10b. 14c. 16 Correct d. 26

Trolling the Web for Free Labor, Software Upstarts Are New ForceBy ROBERT A. GUTHNovember 13, 2006; Page A1http://online.wsj.com/article/SB116338621999421269.html

In late 2003, at a coffee shop in Palo Alto, Calif., three friends weary of work at big Silicon Valley companies decided to create an email program. In a weekend, they cobbled together a simple prototype. They combed the Web for free software, and in a few months they had assembled more than 40 blocks of free programming into a basic system. In February, the three men launched their product at a cut-rate price and started nibbling at the franchise of market leader Microsoft Corp. Like Microsoft's Exchange, Zimbra lets office workers send, receive, store and search the thousands of email messages that can pass through a business daily. Today about four million people use Zimbra, including an Alabama hospital, the Tombstone, Ariz., school district, and 12,000 branches of the big tax preparer H&R Block.Zimbra sprouted from a revolution in the software industry that looms as a long-term threat to Microsoft and other giants. At its heart is a virtual army of software hobbyists who collaborate online to create free programs. Like bloggers and YouTube addicts, they hang out on the Web at all hours, largely for no pay.Now, start-up companies are helping themselves to this software, piecing it together like Lego blocks into new commercial products. Often, they post the products' underlying code on the Web and tap more volunteers to help improve it. Then they sell the software



online, saving the cost of a large sales force. Zimbra co-founder Satish Dharmaraj, 39 years old, leads Zimbra Inc. -- the company behind the software -- with just 55 people, froZimbra is a speck compared with Microsoft, which boasts 140 million users of Exchange. But there are a growing number of other specks. The Web is teeming with Microsoft alternatives, from the Firefox Web browser to sales-support software called SugarCRM. Even Google Inc. is in the game, buying the upstarts, including a spreadsheet and the tiny maker of free word-processing software called Writely.com.Microsoft Chairman Bill Gates says he has seen Zimbra demonstrated and concedes that "they've done a good job," but says the product "doesn't even come close to the things that Exchange does." The trusted communications hub for thousands of the world's biggest businesses, Exchange lets them combine email with conference calling and instant messaging. The newest version, available next month, has improved features for connecting to those services via cellphones and other mobile devices.But Exchange, though full of features, is complicated and can cost more than Zimbra, depending on a complex price structure. Developing the newest version of Exchange took years of work by more than 400 Microsoft employees.The rise of upstarts like Zimbra comes as Microsoft is scrambling to adapt to the broad changes wrought by the Internet. The company gained its lucrative position by dominating the market for software installed on personal computers. But increasingly some of the same basic tasks once handled by Microsoft's software can be done over the Web -- and by phones, handheld computers, and other devices that don't all run Microsoft programs. That's forcing Microsoft to start experimenting with ways to sell software services over the Web, while maintaining its stronghold in computer software.

3. Like Microsoft's Exchange, __________ lets office workers send, receive, store and search the thousands of email messages that can pass through a business daily.a. EXimbrab. Mimbra c. Timbrad. Zimbra Correct

4. Developing the newest version of Exchange took years of work by more than __________ Microsoft employees.a. 400 Correctb. 4,000 c. 40,000d. 400,000

Cuba's Military Puts Business On Front LinesBy JOSÉ DE CÓRDOBANovember 15, 2006; Page A1http://online.wsj.com/article/SB116356024065223514.html

At the height of the Cold War, Cuba's soldiers became a legend on the island when they punched through enemy lines, defeating South Africa's army in Angola. Today Cuban



generals are applying capitalist tactics to try to improve bottom lines in businesses that range from growing beans to running hotels and airlines.Cuba's Revolutionary Armed Forces rent rooms to tourists through Gaviota SA, the island's fastest-growing hotel conglomerate. They sell premium cigars, peddle consumer goods through an island-wide retail chain and serve lobster dinners at the Divina Pastora restaurant in Havana's landmark Morro Castle. The military also has a say in allotting nickel mines and leasing offshore lots for oil exploration. The University of Miami's Institute for Cuban and Cuban-American Studies estimates that soldiers control more than 60% of the island's economy.The military's economic role will likely become even more critical after the death of Cuba's ailing 80-year-old leader, Fidel Castro, who is widely believed to be dying of cancer. Although Mr. Castro has steadfastly opposed economic reforms during his 47-year communist regime, his younger brother and anointed successor, Raúl, has shown a deep interest in free-market experiments in the past. As defense minister since the 1959 revolution, he has frequently looked to the military as his laboratory.With Raúl and the military at the helm of the economy, Cuba could be poised to follow what islanders call the "Chinese model" of liberalization. That means carefully experimenting with market incentives in one of the world's few remaining communist economies, while trying to retain tight political control. It's far from clear that a Raúl Castro government could accomplish a Chinese-style transformation. For one thing, China isn't located just 90 miles from the U.S. and a wealthy community of exiles looking to reshape their home country along American lines. And the military could move to extend monopolistic control -- and opportunities for corruption -- after Fidel's death, squelching any competition.But the seeds of economic reform in Cuba may be planted more firmly than many suspect. One piece of evidence: Raúl has traveled to China a number of times to study Beijing's economic policies and in 2003 he invited the leading economic adviser to then Chinese premier Zhu Rongji, who played a leading role in opening up China to foreign trade and investment, to give a series of lectures in Cuba. Fidel Castro, who deeply opposes reforms, was a notable no-show, says Domingo Amuchastegui, a former Cuban intelligence officer who now lives in the U.S. and keeps close tabs on political developments on the island.In the 1990s, Raúl sent officers, who had previously trained at prestigious Soviet military schools, to learn hotel management in Spain, and accounting in Europe, Latin America, Asia and Canada, says Mr. Amuchastegui. For a time, business books such as "In Search of Excellence" by Tom Peters and Robert H. Waterman became required reading for ambitious officers looking to advance in the ranks, says Eugenio Yañez, an economist who taught management to army officers at Havana's Superior Institute of Economic Direction.Raúl, now 75, also adopted capitalist-style accounting and management incentives to run military-owned factories that made everything from uniforms to bullets. In some cases, workers were given incentive pay. Modest by Western standards, these reforms, called "perfeccionamiento empresarial" -- loosely translated as "entrepreneurial improvement" -- were nevertheless cutting-edge for Cuba.For most of his career, Raúl Castro was considered a tough, even brutal, communist whose hand, as he put it, "didn't tremble" in 1989 when he ordered the execution of a


former close colleague deemed a danger to the regime. Some analysts don't think he has changed much since then. "He's a Stalinist," says Jaime Suchlicki a Cuba analyst at the University of Miami, who predicts Raúl will resort to more repression after Fidel dies.In recent weeks, speculation has grown about Fidel's health problems. The longtime dictator temporarily relinquished power on July 31 to Raúl after announcing he had undergone surgery for intestinal bleeding. After rumors of his death swirled in Havana, the Cuban government released a video on Oct. 28 showing a gaunt and aged Castro in a track suit. U.S. officials believe Mr. Castro has some sort of stomach or colon cancer. With his brother incapacitated, Raúl has taken a blustery communist line. "When the U.S. says there should be a transition in Cuba, they mean a shameful return to the neocolonial garbage of capitalism they imposed on this country for 60 years," Raúl told an audience of government union leaders in September.But many Cuba watchers believe those statements are meant to give political cover to Raúl, who has become more pragmatic as he has aged, and has been searching for ways to improve Cuba's dismal economic performance, especially after the Soviet Union ended its subsidies in 1990. Between 1989 and 1993, Cuba's gross domestic product fell 35%, while the island's foreign trade slumped by 75%, says Carmelo Mesa-Lago, professor emeritus of economy at University of Pittsburgh.As living standards plummeted, Havana residents ate many of the city's cats. An epidemic of optic neuropathy, caused by deficiencies in nutrition and resulting in temporary blindness, struck down some 35,000 Cubans. For Raúl, economic security became a critical part of national security. "Beans are more important than cannon," he told troops, Fidel Castro reluctantly allowed the changes, because Cuba had little alternative. The Castro brothers appointed military and intelligence officers, who were their most trusted and unswervingly loyal supporters, to court foreign capital. Col. Gustavo Loret de Mola, an electrical engineer by training, was named deputy minister of communications and negotiated Cuba's first cellphone deal, with a Mexican company, in 1991, says his son, Camilo Loret de Mola. He helped the military recruit foreign tenants for Soviet-built bases that were turned into duty-free zones.Desperate to cut costs, Raúl slashed the military from about 300,000 troops in 1990 to some 45,000 today, according to Frank O. Mora, a Cuban military expert at the National Defense University in Washington. To revive the economy, he pushed innovations such as farmers markets and self-employment for plumbers, hairdressers and other small-time entrepreneurs.At the time, Fidel Castro reluctantly allowed the changes, because Cuba had little alternative. The Castro brothers appointed military and intelligence officers, who were their most trusted and unswervingly loyal supporters, to court foreign capital. Col. Gustavo Loret de Mola, an electrical engineer by training, was named deputy minister of communications and negotiated Cuba's first cellphone deal, with a Mexican company, in 1991, says his son, Camilo Loret de Mola. He helped the military recruit foreign tenants for Soviet-built bases that were turned into duty-free zonesThe experiments sometimes flopped. In 1998, the younger Mr. Loret de Mola says he persuaded a Spanish entrepreneur to start a travel agency and hydroponics vegetable farm inside the cavernous helicopter hangar at a former submarine base in the port of Mariel. The businessman only managed to send a few flights of cucumbers and tomatoes on Aerogaviota, an airline owned by the Cuban armed forces, before the farm went out of


business. "When he had workers to harvest the vegetables, he couldn't get a plane, when he could get a plane, he couldn't get workers," says Mr. Loret de Mola, who now sells insurance in Miami.

5. The University of Miami's Institute for Cuban and Cuban-American Studies estimates that soldiers control more than ____ of the island's economy.a. 40%b. 50%c. 60% Correct d. 70%

6. The military's economic role in Cuba will likely become even more critical after the death of ailing 80-year-old leader, _____, who is widely believed to be dying of cancer.a. Raul Casterb. Raul Castroc. Fidel Castro Correct d. Fidel Caster

Giant Neighbors Russia, China See Fault Lines Start to AppearBy GUY CHAZANNovember 14, 2006; Page A1http://online.wsj.com/article/SB116345204072421909.html

AYATSKOYE, Russia -- When Vladimir Shiryaev bought Ayatskoye, a near-bankrupt farm in the Urals, in 2000, he wondered how he would ever get the harvest in. Most of the local labor force was either too old or too drunk to work.So he sought rescue from a group of Chinese laborers, led by a woman from Inner Mongolia named Meng Dani. He leased to them about 50 acres, and within a few months, they were growing tomatoes and cabbages on land that had stood untilled for years.Mr. Shiryaev is delighted with his hard-working new tenants. "They've got a really serious operation going here," he says. "I really hope they can inspire the locals to work harder." Regional officials are so impressed they're now planning to turn millions of acres of long-uncultivated fields over to Chinese peasants like Ms. Meng.But among many natives here in Russia's heartland, the idea has proved controversial. "Those farmers are a landing force," says Igor Vyaginsky, a crew-cut local activist from the Movement Against Illegal Immigration with a penchant for military terminology. "They'll establish a bridgehead and then spread out. We could end up losing our territory."The dispute over Ayatskoye is typical of the tension at the heart of the Russia-China relationship. Russia is finding it hard to cope with the emergence of a new global power right on its doorstep, and many Russians fear being overwhelmed by their dynamic and more-populous neighbor. But on the ground, especially in Russia's sparsely populated countryside, Chinese labor is helping to stave off economic ruin.To the outside world, Russia and China appear to be cozying up like never before. In October 2004, Moscow ceded territory to its southern neighbor to resolve a longstanding border conflict that had sparked a war in the late 1960s. The following year the two



carried out their first-ever joint military exercise. China buys about $1 billion worth of Russian weapons every year, making it the Russian arms industry's biggest customer. Altogether, the two countries' trade was valued at $29 billion last year, an increase of 37% over 2004.Meanwhile, as China scours the world for energy to power its booming economy, it's increasingly looking to Russia's bountiful reserves of oil and gas. Last week, the Kremlin's oil company, state-controlled OAO Rosneft, pledged to nearly double crude exports to China and said it was teaming up with China National Petroleum Corp. to build an oil refinery and operate gas stations in China.But China's efforts to strengthen its economic ties with Russia have run into repeated roadblocks. Only one of Beijing's state energy companies has so far succeeded in gaining a stake in a Russian oil field, and only when it agreed to relinquish a controlling stake to Rosneft. Despite years of trying, Beijing has so far failed to secure access to a planned pipeline carrying Siberian crude to the Pacific. Russia, concerned about becoming too dependent on one customer, has refused to commit to building a spur that would link the pipeline to northern China, instead hinting that it will rely on rail shipments -- which are much costlier and less reliable.Even when the Chinese try to invest in less-sensitive sectors than energy, the relationship can be fractious. In St. Petersburg, Russia's second-largest city, local politicians have campaigned to block a $1.3 billion real-estate development by a conglomerate of five Chinese state-owned companies. The concern: that the 553.5-acre project, which would include housing, schools, hospitals, recreation and retail, would become a "Chinatown"-style enclave for illegal immigrants.Array of ObstaclesIn Blagoveshchensk, a city on the Russian-Chinese border, efforts to build trade have fallen flat. Eleven years after Moscow signed a deal to build a bridge across the Amur River; a vast array of bureaucratic obstacles is still preventing construction -- despite pleas from Beijing to speed things up.Behind the ambivalence is a fear that once the floodgates are opened, Russia could be swamped by Chinese immigrants. The surrounding tensions over linguistic, cultural and economic differences echo those along the U.S.-Mexico border, where states have to deal with a constant flow of legal and illegal immigrants seeking opportunity. In Russia the concern is heightened by the stark contrast between China's enormous population and Russia's steep demographic decline.The differences are most palpable in Russia's Far East, a vast region bordering on China that has more than a third of Russia's territory but just 5% of its population -- seven million people. Across the border are China's three northeastern provinces -- Heilongjian, Jilin and Liaoning -- with a combined population of more than 100 million.Inevitably, tens of thousands of Chinese migrants are already crossing over to fill the void, some of them settling down and acquiring Russian citizenship. According to the official count, there are about 250,000 Chinese living in Russia. Some Russian academics say they could become the predominant ethnic group in the Far East and eastern Siberia by the year 2025.Visiting Blagoveshchensk in 2000, President Vladimir Putin warned that if the authorities failed to develop the region, "even the indigenous Russian population will mainly be speaking Japanese, Korean and Chinese in a few decades."


Yet in the countryside and Russia's provincial capitals, the Chinese are often seen quite differently -- as a potential lifeline for an economy desperately in need of extra hands.One such capital is Yekaterinburg, a big industrial center about 50 miles south of Ayatskoye. Agriculture in the surrounding region has long been in crisis: The rural population collapsed in the 1990s as newly privatized collective farms went bust and men drifted away to find jobs on city construction sites and the oil rigs of Siberia.Now, says the regional agriculture minister, Sergei Chemezov, one in four farms is bankrupt and more than 10% of arable land -- about 400,000 acres -- is uncultivated. The Yekaterinburg region now has to import 20% of its grain."When you fly over China, you can see every inch is farmed," Mr. Chemezov said in an interview in his office, which is decorated with miniature sheaves of corn and a huge stuffed owl. "Then you cross the border and on the Russian side it's just vast emptiness. Terribly sad!"

7. According to the official count, there are about ______ Chinese living in Russia. Some Russian academics say they could become the predominant ethnic group in the Far East and eastern Siberia by the year 2025.a. 100,000b. 150,000c. 250,000 Correctd. 300,000

8. China buys about $1 billion worth of Russian ______ every year.a. automobilesb. airplanesc. vodkad. weapons Correct

Surprise Hostile Bid for Delta May Spur Airline Merger WaveBy MELANIE TROTTMAN and EVAN PEREZNovember 16, 2006; Page A1http://online.wsj.com/article/SB116364509916324683.html

US Airways Group Inc.'s $8.67 billion hostile takeover bid for Delta Air Lines suggests that the long-predicted frenzy of consolidation among U.S. airlines may have begun.The deal would create the biggest U.S. airline -- at least before any assets are sold off -- and bring Delta out of bankruptcy-court protection, where it has been since September 2005. Many in the industry believe airlines' financial recovery will be faster if there are fewer big carriers.Airline stocks surged, with the share prices of American Airlines parent AMR Corp. and Continental Airlines reaching their highest levels since the Sept. 11, 2001, terrorist attacks. Speculation was rife about other possible mergers. UAL Corp.'s United Airlines has been interested in Continental, and American could take a look at Northwest Airlines, which is also in bankruptcy proceedings.The US Airways-Delta deal is hardly a sure bet. Delta Chief Executive Gerald Grinstein, who was getting dressed for work when he heard a radio report about the bid, repeated



yesterday that Delta wants to emerge from bankruptcy proceedings by itself. US Airways will need broad support from Delta creditors and the approval of federal antitrust authorities, who may be concerned about the two airlines' tight grip in markets up and down the East Coast. If competition decreases in those markets, consumers could see increased fares. (See related article.1)It's difficult enough to buy a company against the wishes of management, and the complications multiply when that company is in bankruptcy court. The bankruptcy code requires that at least half the creditors by number, and two-thirds by the value of their claims, approve a restructuring plan. What's more, until Feb. 15 Delta's managers have the exclusive right to file a reorganization plan with the bankruptcy court and with creditors. Some bankruptcy lawyers said they have rarely seen a bid like the one by US Airways.Mr. Grinstein of Delta is nonetheless under pressure to show creditors he can give them a better deal. "Delta is going to have to...come up with a plan that is better than what US Airways laid out on the table," said John Penn, a bankruptcy attorney at Dallas law firm Haynes & Boone LLP.The euphoric market reaction to US Airways' surprise announcement heightens the pressure on Delta management. Traders drove up US Airways shares nearly 17% yesterday on hopes that it can strike a deal with Delta -- an unusual rise for a potential acquirer that showed investors are heartened by the potential for fewer big carriers and less capacity.Jake Brace, United's chief financial officer, raised the prospect of a merger wave at an investor conference in New York. He said there is "probably no need for more than, you know, two, three, maximum four network carriers," referring to airlines with nationwide routes.

9. US Airways Group $8.67 billion hostile takeover bid for ______ suggests that the long-predicted frenzy of consolidation among U.S. airlines may have begun.a. Northeast Air Linesb. Northwest Air Linesc. Eastern Air Linesd. Delta Air Lines Correct

10. Traders ______ the price of US Airways stock shares recently on hopes that it can acquirer another airline.a. drove up Correct b. drove downc. doubledd. cut in half

How Milton Friedman Changed Economics, Policy and MarketsBy GREG IP and MARK WHITEHOUSENovember 17, 2006; Page A1http://online.wsj.com/article/SB116369744597625238.html



http://online.wsj.com/article/SB116364022310224587.html?mod=Leader-US

A half century ago, Milton Friedman's advocacy of free markets over government intervention and his prescription for inflation-fighting by central banks were treated as fringe notions by many economists. By the time the Nobel Prize-winning economist died yesterday at the age of 94, his views had helped to reshape modern capitalism.A diminutive man known for his strong-willed and combative style, Mr. Friedman provided the intellectual foundations for the anti-inflation, tax-cutting and antigovernment policies of President Ronald Reagan and British Prime Minister Margaret Thatcher and an era of more-disciplined central banking. His ideas helped to end the military draft in the 1970s, gave birth to staple conservative causes such as school vouchers and created the groundwork for new economic views about the Great Depression, unemployment, inflation and exchange rates.Many of his ideas remain controversial to this day, or carry less weight. Central bankers don't follow his prescriptions for how to implement monetary policy, considering them impractical. And despite his strong advocacy, publicly funded vouchers for students to attend private schools are still rare and researchers struggle to prove their effectiveness. His advocacy of the decriminalization of drugs hasn't been heeded.But few would argue against the notion that Mr. Friedman -- with highly technical academic papers, popular books and columns, and the ear of powerful politicians -- helped to shift the center of debate in the U.S. and abroad about the proper role of government in managing a nation's economy. His influence spread far afield, from Hong Kong to Chile to Russia and Eastern Europe, and his ideas took root with reformers pushing for privatization and open markets."Among economic scholars, Milton Friedman had no peer," Federal Reserve Chairman Ben Bernanke said yesterday. "The direct and indirect influences of his thinking on contemporary monetary economics would be difficult to overstate. Just as important, in his humane and engaging way, Milton conveyed to millions an understanding of the economic benefits of free, competitive markets, as well as the close connection that economic freedoms bear to other types of liberty."President Bush said, "His work demonstrated that free markets are the great engines of economic development."Critics said he inspired policies that put millions of people out of work in pursuit of low inflation and demonized almost everything the government did, no matter how beneficial or democratically chosen. "Milton Friedman didn't make a distinction between the big government of the People's Republic of China and the big government of the United States," said James Galbraith, professor of government at the University of Texas and son of the late, liberal economist John Kenneth Galbraith, who often sparred with Mr. Friedman.

11. A half century ago, __________ advocacy of free markets over government intervention and his prescription for inflation-fighting by central banks were treated as fringe notions by many economists.a. Milton Friedman's Correct b. Milton Smith’sc. Fredrick Friedman'sd. Ronald Reagan’s


12. A key idea promoted by a recently deceased Nobel Prize-winning economist was ___.a. free school lunchesb. school vouchers Correct c. school playgroundsd. free illegal drugs

Questions 13 – 17 from Marketplace

Business Is Personal, So Managers Need To Harness EmotionsBy CAROL HYMOWITZNovember 13, 2006; Page B1http://online.wsj.com/article/SB116338036009521202.html

Managers often think they should be impassive and unemotional, and encourage their employees to be the same. But emotions drive performance, and bosses who don't acknowledge their own and others' temperaments can't inspire the best work from their staffs -- or even motivate themselves."If we're preoccupied by worry, resentment or boredom, our mental agility sputters," says Daniel Goleman, whose new book, "Social Intelligence," explores how relationships with bosses and colleagues, family and friends, shape our brains and affect our bodies. "Good relationships act like vitamins, while bad ones are like poison -- undermining our cognitive efficiency and creativity."This isn't news to most employees. Those who have survived layoffs report that whenever a new round of cuts is announced, productivity and the quality of work suffers. Others who work for intimidating or rancorous bosses say they have learned to be guarded and are reluctant to share information or new ideas.Many chief executives, on the other hand, are too detached from employees to recognize this. They seem particularly self-absorbed these days, partly as a result of the rapid turnover at top jobs. CEOs who worry their tenure will be brief tend to focus on grabbing as much as they can for themselves -- negotiating huge compensation packages and golden parachutes, or trying to shore up their popularity with directors.Adroit business leaders know the emotional messages they send through the company are powerful. If they are arrogant or derisive, they may cause "emotional distress that impairs the brain's mechanism to learn and think clearly," says Mr. Goleman.At Intuit, the Mountain View, Calif., maker of Quicken, TurboTax and other money-management software, CEO Steve Bennett understands that employees who are unhappy at work won't contribute their best efforts -- on the job or even at home. "It will cause troubles in their personal relationships," he says. He tells his Intuit managers to create a "psychological contract" with every employee, spelling out what is expected of them, how well they are performing and what they must do to advance.When he joined Intuit six years ago, Mr. Bennett found a company where employees didn't know how to handle differing emotions and opinions. They were afraid to counter one another at meetings and couldn't make decisions without spending hours trying to reach a consensus. He subsequently urged all employees to voice their views frankly and without fear of offending anyone.



"We want everyone to aim for what we call True North objectives -- or better short-term as well as long-term results -- and we want everyone to feel enthused and connected at work," says Mr. Bennett, who spends half of his time coaching employees. "If you accept this contract and want to learn but aren't getting good results, we'll find you a job at the company where you can perform better."This doesn't mean that CEOs should avoid controversy or protect employees from the stresses of work. They need to challenge subordinates continually to improve their work.Mr. Bennett doesn't hesitate to give constructive criticism, but avoids angry attacks. At a recent meeting to discuss a possible acquisition, he listened while a senior manager who wasn't on the acquisition team dominated the conversation. He then told him, "You know, you don't know a lot about this.""I tried to say it in a joking way rather than an angry way," he explains, "but I wanted the others at the meeting to know that even though the manager was at a higher rank than them, they shouldn't be swayed by him."After the meeting, Mr. Bennett met privately with the manager to talk further about what had happened. "His feelings were ruffled, but I told him, 'You have a job and doing acquisitions isn't part of it,' " he says.Campbell Soup CEO Douglas Conant believes in working to focus employees' emotions toward their jobs. He says you have to get employees to "fall in love with your company's agenda." That means being engaged with them personally, helping them to solve problems and recognizing their achievements. "That doesn't mean compromising your standards," he said, or being so sensitive about feelings that you can't dismiss an underperformer, he adds.As part of his turnaround efforts at Campbell over the past five years, Mr. Conant replaced 300 of the company's top 350 managers. The fact that half of the new leaders came from within sent a message to lower-level employees that they had a shot at promotions. He also spent heavily on the company's condensed-soup line, installing easier-to-access shelving in stores and launching a new line of low-sodium soups, among other things. The changes gave a sense of accomplishment to most employees.Trying to keep emotions out of the workplace "is like telling the tide not to come in," says Kenneth Eisold, a New York psychotherapist. He advises his patients to seek a balance, and to learn to value themselves for qualities that are distinct from their work. "If your entire value as a person depends on your career success, any work setback or failure will crush you," he says.

13. Emotions affect the workplace in the following ways _____.a. employees who are unhappy at work won't contribute their best efforts, on the job or even at home Correct b. emotions do not drive performancec. emotional distress improves the brain's mechanism to learn and think clearlyd. whenever a new round of cuts is announced, productivity and the quality of work improves to prove employee’s worth to the company

Tips for PowerPoint: - Go Easy On the Text - Please, Spare UsBy JARED SANDBERGNovember 14, 2006; Page B1


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You would think that Mark Glackin didn't like PowerPoint at all. Ask the advertising vice president his thoughts about Microsoft's tool, which he's used to spruce up his presentations for the past 12 years, and you get an impassioned, 1,200-word screed on the things that drive him absolutely nuts about it.Needless to say, you also get a PowerPoint slide summarizing his points. To name a few, people write paragraphs for each bullet point and simply recite their slides. "If you are going to just read the slides, email them and don't make everyone come to a meeting," he wrote in an email. Please don't squeeze a ton of text into your slide; don't go special-effects crazy with flying text. It may enhance your PowerPoint but not your point."Oh, do you want to hear more pet peeves? I'll over-share anyway," he wrote. Collect multiple presentations on one machine so there isn't endless laptop plug-and-slay. And ban laser pointers, which are wickedly distracting, he says. "It's like trying to watch the net at a ping-pong match."Even people who love PowerPoint have no shortage of gripes about it. Over the years, the software has been blamed for boring people senseless. The phrase "Death by PowerPoint" is common corporate parlance. Some companies and conference organizers have prohibited PowerPoint, and the press perennially skewers it as a thought-free plague. One legal scholar, tongue-in-cheek, proposed a constitutional amendment banning its use.Yet, there are an estimated 30 million PowerPoint presentations given each day around the world, inviting the question: Why, if so many people dread presentations, do we still see so many of them?One answer: (big bullet point, please) Because it's a lot easier on presenters than the audience it's allegedly intended for."It's much easier to write a presentation if you're writing in bullet grunts," says Edward Tufte, the pre-eminent designer of visual information, who argued in a 28-page polemic against the program, "The Cognitive Style of PowerPoint," that PowerPoint routinely disrupts and trivializes content.Mr. Tufte says thought and analysis are sacrificed for convenience to the speaker, hurting both content and the audience. "PowerPoint allows presenters to pretend they're giving a presentation," he says. Still, "its cognitive style profoundly corrupts serious communications," he says.Dave Paradi, who co-wrote a book on PowerPoint, adds that executives routinely "seem to be surprised that they should think about the audience before they think about what they're saying." Mr. Paradi estimates that bad PowerPoint presentations cost companies $252 million a day in wasted time. He thinks that's a conservative figure.PowerPoint proponents say slideware doesn't bore people, people bore people. The tool puts powerful features at their fingertips and they need learn only how to best use it, they say. To lifeless presentations, it adds what is described -- unfortunately -- as verve, flair and panache.Besides, for those who freeze in front of an audience, PowerPoint can help keep them on message, another reason for its popularity. "Fear of public speaking ranks slightly below night-landing a plane on an aircraft carrier during a storm," says John Falck, a partner at a proprietary trading firm who has seen his share of "soul-sapping PowerPoint muggings."


http://online.wsj.com/article/SB116346620439722193.htmln

When they freeze and forget their own name, they can just read it off the first slide, he says. "PowerPoint is a great crutch."Another PowerPoint truism inflating its popularity: Your own PowerPoints don't smell.Two weeks ago James Studinger, a sales representative, was told by another salesman about his "wonderful" PowerPoint presentation. A moment later, Mr. Studinger was staring at a slide that said only "Long Term Relationship." His mind began to wander; he pondered why someone would devote a whole slide to those three words and why someone would think that would impress him. "By then I was beginning to wonder about the competency of a person who thought that was a great presentation," he says.But he didn't protest, which may be another reason why PowerPoint is so prevalent: People tell everyone but the presenter of their boredom -- civility that only reinforces its use."It's just not worth generating the ill will that it's going to cause," says Stephen Rojak, fresh from a presentation. When he was in software sales, Mr. Rojak's former company sent him to a class to learn how to make an effective presentation without PowerPoint, because all of its competitors were using it. "I used to call it the Betty Ford Clinic for overcoming PowerPoint dependency," he says. The instructors mocked the program with slides of photos, noting in one: "This is our corporate headquarters," and with another, "This is our corporate headquarters at sunset."But the civility has some self-interest. Larry Chung, a software developer, doesn't criticize fellow presenters, he says, "because I know the tables could be turned a few weeks later." To him, PowerPoint presentations are like corporate karaoke. "For the most part, it's tough to listen to," he says. "We all applaud each other even though we know how bad it stinks."

14. Common complaints about PowerPoint presentations include _____.a. "PowerPoint is a great crutch."b. bad PowerPoint presentations cost companies $252 million a day in wasted timec. PowerPoint routinely disrupts and trivializes content.d. all of the above Correct

On the Trail of Ancient CuresBy NICHOLAS ZAMISKANovember 15, 2006; Page B1http://online.wsj.com/article/SB116354914377323235.html

SHANGHAI -- On an afternoon in Xinjiang province in China's remote and mountainous west, botanist Shen Jingui was searching for a snow lotus, a grayish-white flower used for centuries in Chinese medicine to alleviate the symptoms of premenstrual syndrome. He spotted the plant on a rock ledge and shimmied across to pick it. He slipped and plunged some 30 yards, slamming into rocks on the way down.When he regained consciousness, local farmers were putting him on a horse to take him to the nearest health clinic, several hours away. "I was very scared," he recalls of the incident, "but I was happy to collect the material."Mr. Shen, head botanist for the Shanghai Institute of Materia Medica, a government-funded laboratory, has spent three decades trekking across China and going to great



lengths to ferret out rare plants and herbs traditionally used in treatments for ailments ranging from aches and pains to cancer.His bag of plants has captured the interest of Swiss drug giant Novartis AG, which since 2000 has invested several million dollars in a venture with SIMM. Last month, Novartis struck a similar deal with the Kunming Institute of Botany, an organization that works with traditional remedies in the country's southwestern Yunnan province. Earlier this month, Novartis announced it will invest about $100 million in its own pharmaceutical research-and-development center in Shanghai.Facing soaring costs in developing new drugs and a limited pipeline of promising candidates, Novartis hopes that traditional Chinese medicines will hold the secrets for a new generation of blockbusters to fight diseases such as Alzheimer's. While Novartis isn't the only multinational drug company seeking to tap traditional Chinese cures -- French drug maker Servier also has a collaboration with SIMM -- Rachel Lee, a senior manager at Boston Consulting Group in Shanghai, says "no other major pharma has gone further than Novartis" in this area.The collaboration between East and West on drug development is in many ways an unlikely one. Chinese and Western specialists approach pharmacology from very different angles. For centuries, Chinese doctors have tinkered with different mixtures of medicines, guided in part by trial and error, to see which ones are most effective. Working with that body of knowledge, they operate on the assumption that the traditional remedies work, even if by Western scientific standards it's not completely clear why. Chinese doctors "know it will cure people, but they don't know what target it hits," says Shen Jingkang, a professor at SIMM.In contrast, researchers at Western pharmaceutical companies often begin the search for a drug by identifying a target, and then look for a chemical compound that has the desired effect. If they do find a drug that works, they usually understand the mechanism behind it. That helps in refining the compound to make it more effective and in convincing regulatory authorities such as the U.S. Food and Drug Administration that the medicine is safe and effective.

15. Chinese and Western specialists approach pharmacology from very different angles. a. If Chinese doctors do find a drug that works, they usually understand the mechanism behind it.b. Western pharmaceutical companies often begin the search for a drug by identifying a target, and then look for a chemical compound that has the desired effect.c. Chinese doctors "know it will cure people, but they don't know what target it hits d. Both b and c Correct

U.K.'s Pearson Tests The Group Dynamic For a 'Wiki' BookBy WILLIAM M. BULKELEYNovember 16, 2006; Page B1http://online.wsj.com/article/SB116365019587024790.html

In a move that could shake up the book industry, publishing giant Pearson PLC is joining with two top business schools to create a business book authored and edited by a "wiki" -- an online community dedicated to writing.



The effort is inspired, in part, by the best-known wiki-produced work -- Wikipedia, a not-for-profit online encyclopedia. Despite occasional hiccups, Wikipedia is increasingly regarded as a reliable source for information, aided by community-enforced rules that it can't contain either personal points of view or original research.In general, a wiki is an online site that lets users add and edit content. The name is based on a Hawaiian term meaning "rapidly" -- as in "wiki wiki."The wiki book, produced by a community of business experts and managers, will be called "We Are Smarter Than Me." It will explore how businesses can use online communities, consumer-generated media such as blogs, and other Web content to help in their marketing, pricing, research and service.Barry Libert, a former McKinsey & Co. consultant who is CEO of Shared Insights Inc., a Woburn, Mass., company, persuaded London-based Pearson, the University of Pennsylvania's Wharton School and the Massachusetts Institute of Technology's Sloan School to help develop the new book, which will be published under Pearson's Wharton School Publishing imprint.The WeAreSmarter.org1 Web site, co-founded by Mr. Libert and Wharton vice dean Jon Spector, went online a month ago with initial content they shaped along with MIT management professor Thomas Malone, among others. They chose chapter headings and then wrote a few pages to create a starting point. For instance, a chapter titled "We Can Research It," tells an anecdote about an Australian man who started a mail-order brewery based on votes by 20,000 cellphone users on what makes an ideal beer. Other participants can then edit the contents or add anecdotes.The wiki leaders expect business consultants and executives to contribute to the book site, which, like Wikipedia, doesn't pay writers for their work. The site is open to anyone, but does ask contributors to supply information. WeAreSmarter expects to close submissions to the book wiki by the end of the first quarter next year and turn it over to paid ghostwriters to turn it into a 120-page business book aimed at the fast-growing airport bookstore market. It will go on sale next fall. Despite the free labor of the original authors, the list price will be $25.99, says Tim Moore, publisher of two of Pearson's business imprints, Wharton School Publishing and FT Press. Authors will vote on a charity to receive any profits."Wikis are one of those things that you have to embrace early, so you can figure out what the brave new world looks like," Mr. Moore says. Part of his goal is to avoid being ambushed by the Internet like "the music industry, which really got whacked." He wouldn't say how much Pearson was spending on the project, but called the sum comparable to other business books.Wiki authoring of a printed book could be a "wonderful" online marketing tool, Mr. Moore says. After the book is published, WeAreSmarter will remain online, where people can continue to contribute. He notes that 10,000 people, mostly alumni and faculty at the two schools, have already heard about the book through invitations to join the project and 1,000 have accepted; the plan has already been cited in "like, 47 blogs," he adds.Other publishers are looking on with interest. Joe Wikert, executive publisher with John Wiley & Sons Inc., a Hoboken, N.J., textbook publisher, predicts that the book's quality will be high. "The community won't allow it to be garbage," he says. But with so many experts involved "it will be interesting to see how they manage the egos," he says.


http://www.WeAreSmarter.org/

"I doubt authors will see this as much of a threat to their domain," says Paul Aiken, executive director of the Authors Guild, a New York-based writers' organization. "Readers generally look for a strong, consistent author's voice, which isn't something a wiki can really provide." However, having a wiki produce a book about wikis might be one of the few times that it would work, he adds.The Wikipedia Foundation, which produces Wikipedia, has an online textbook project with the longer term goal of providing an alternative to pricey high school and college texts that often cost over $100 each. But these "Wikitexts" -- now online only -- haven't been embraced by school boards and professors who assign reading material.Many experts are impressed with the ability of large groups of people to solve problems or predict outcomes. The 2004 best-seller "The Wisdom of Crowds," by James Surowiecki, covered the phenomenon. Many companies have started using wikis internally and with partners for product development. "Prediction markets," in which participants invest imaginary money, have often proved accurate in forecasting elections.One goal of the WeAreSmarter project is to see how a wiki can organize and balance material provided by experts such as consultants and professors and managers who are using the techniques in their own businesses.Mr. Libert thinks that the big community collectively will select solutions that are better than the answers provided by individual professors or consultants.One of the big challenges will be finding ways to motivate the professional experts, many of whom make money by writing books themselves, says Mr. Malone of MIT. "The question is, can we create an incentive structure so they'll put in some of their best thinking, or will this just be incidental thinking?" He says it's possible that individuals may get credits for having primary responsibility for a particular chapter. On the other hand, he says, "If you really are an expert in this area, you wouldn't want to be left out." Authors' names will be printed on the book cover and on the Web site.The wiki is handling the copyright question by getting participants to agree to a Creative Commons license that turns their contributions over to WeAreSmarter. Creative Commons, organized by Stanford University law professor Lawrence Lessig, provides a variety of different licenses by which people can allow or restrict their words or music to be used by others.

16. The wiki book, produced by a community of business experts and managers, will be called _______. It will explore how businesses can use online communities, consumer-generated media such as blogs, and other Web content to help in their marketing, pricing, research and service.

a. "We Are Smarter Than Me" Correctb. “They Are Smarter Than Me”c. “We Are Smarter Than Them”d. “Nobody Is As Smart As Us”

The New Animated Film 'Happy Feet' Doesn't Dance Around Serious IssuesBy KATE KELLYNovember 17, 2006; Page B1http://online.wsj.com/article/SB116373257478225933.html



Kids who go see Warner Bros. Entertainment's animated film "Happy Feet" this weekend are in for more than just the story of a tap-dancing penguin. They will also get a primer on overfishing and pollution.The environmental subplot wasn't a large element of the movie's original screenplay. But as he reworked the script, director George Miller, who says his native Australia has been strongly affected by global warming, felt compelled to amplify the green themes. One particularly arresting moment: the sight of a beautifully feathered penguin with his neck stuck in a six-ring canned-beverage holder -- which the bird regards as a special talisman until it starts to choke him. "You can't tell a story about Antarctica and the penguins without giving that dimension," Mr. Miller says.

17. Kids who go see the animated film "Happy Feet" this weekend will also get a primer on _______.a. global warmingb. product lifecycle managementc. overfishing and pollution Correct d. politics and voting

Questions 18 – 23 from Money & Investing

How to Give Away Your MoneyBy RACHEL EMMA SILVERMANNovember 11, 2006; Page B1http://online.wsj.com/article/SB116320263594620328.html

One of the most noble tax breaks available -- giving to charity -- is getting trickier.This year, as part of the summer's landmark pension-reform bill, an array of rule changes are being implemented that encourage philanthropy while also cracking down on abuses of the system. One of the most important new incentives: Older individuals may now donate as much as $100,000 a year to charities directly from their individual retirement accounts, enabling them to avoid paying income tax on those sums.However, it is also getting tougher to give away non-cash property, whether it is dingy old clothes or pricey works of art. Too many people, it seems, were overestimating the value of gifts like these to score a fat tax break.Another change: Starting Jan 1., you can't take deductions for small cash gifts without a specific paper trail. In other words, toss money into a church collection plate or cut a quick check to a charity, and you will need a receipt (or a bank record) to get the deduction.At the same time, charities themselves are making their own changes designed to encourage giving. Some popular "donor-advised funds," in which you make a donation, receive an immediate tax deduction and then later suggest which charities receive distributions, have reduced their fees and lowered their minimum contributions to $5,000 or less, which may attract new donors.



The pension legislation, meanwhile, contains a slew of new provisions designed to increase the accountability of donor-advised funds and other charitable-giving vehicles that provide generous tax breaks."We consider this to be the most comprehensive reform of the sector since the 1969 tax act," says Diana Aviv of Independent Sector, a coalition of nonprofit groups. Although charities have been critical of some of the measures, in general, Ms. Aviv says, "We think they went a long way" toward stopping "unscrupulous individuals from enriching themselves at our expense."The changes come at a time when charitable giving has been booming, driven by a robust economy and a string of high-profile natural disasters. Charitable contributions by Americans jumped about 6% to $260.28 billion last year, the strongest increase since 2000, according to an annual report issued by the Giving USA Foundation and conducted by the Center on Philanthropy at Indiana University.Many charities see an uptick in giving at the end of the year, amid a one-two punch of the holiday giving season combined with pressure to avoid a big tax hit. This year, many nonprofit groups expect the season to be even stronger than usual, thanks to the record-high stock market. "A lot of people are funding charities with appreciated stock," says Robert F. Sharpe Jr., president of Sharpe Group, a financial-advisory firm for nonprofits in Memphis, Tenn.One tip: Mr. Sharpe suggests that individuals looking to give to charity this year should consider donating shares of a stock that has made big gains, then turning around and using cash -- say, a year-end bonus -- to buy new shares of the same stock. Giving away appreciated shares generates an income-tax deduction while also avoiding capital-gains taxes. At the same time, by rebuying the shares with cash, you can still maintain your position while lowering the future capital-gains bite.

Here is a guide to some of the key rule changes and how they affect charitable giving.

Giving from an IRA, tax-free. Individuals 70½ years of age and older can now donate as much as $100,000 each year to charity, tax-free, directly from their IRAs. This is a significant change, because for the first time, it allows retirees to avoid paying income tax on the money that they are required to take out of their IRA each year. (Provided that the withdrawal goes directly to charity.)The changes are important for individuals who don't itemize their deductions. Nonitemizers can't get a tax deduction for charitable gifts and would otherwise still have to pay income taxes on required distributions from their IRAs. The new rules also make sense for seniors with well-funded IRAs who already have plenty to live on, or for individuals whose required minimum distributions would bump them into a higher tax bracket.However, donors can't also take a tax deduction for these IRA rollovers to charity. "If you don't have to report the income, you can't also take the deduction," says Rockville Centre, N.Y., IRA consultant Ed Slott. "You can't get it both ways."But there are some big caveats to the new rule. For one, the tax break is available only in 2006 and 2007. And gifts have to be made directly from an IRA to a charity to benefit from the new tax treatment. "It can't be in your hands for even a nanosecond," says Stamford, Conn., lawyer Conrad Teitell.


In addition, you can't receive any goods or services in exchange for the gift. And you can't do a rollover to some popular charitable vehicles, including donor-advised funds and charitable trusts.Arthur Taylor recently made a direct contribution from his IRA to support his alma mater, the University of Alabama. "It looks like a more efficient way to give," says Mr. Taylor, of Demopolis, Ala.Hang on to receipts. In a major change going into effect starting Jan. 1, you won't be able to deduct cash contributions or other monetary gifts unless you can show a bank record or a written receipt from the charity. The law didn't specify what exactly counts as a "bank record." So, in the meantime, make sure to get a receipt.Give away the "good" stuff. Under the new law, you generally can't deduct gifts of used clothing or other household items unless they are in "good" condition or better (although Congress failed to define "good"). If the gift isn't in good condition, you can still deduct it if the amount claimed is more than $500 and if you include a "qualified appraisal" with the tax return. The new legislation also toughens the requirements and penalties for appraisers.The Internal Revenue Service says it plans to issue further clarification of some of the new rules.Meantime, Web sites such as Intuit Inc.'s ItsDeductible (www.itsdeductible.com1), the Salvation Army's online Valuation Guide (www.satruck.org/ValueGuide.aspx2) and Goodwill Industries' (www.goodwillpromo.org3) can help donors figure out the charitable value of many household goods.

18. Charitable contributions by Americans jumped about 6% to ______ last year, the strongest increase since 2000. a. $260.28 millionb. $560.28 millionc. $260.28 billion Correctd. $560.28 billion

Dead DinosaursBy JUSTIN LAHARTNovember 13, 2006; Page C1http://online.wsj.com/article/SB116338285280821244.html

Ever since oil prices started falling from their peak levels this summer, investor interest in the idea of peak oil has declined as well.But peak oil isn't about the economics of oil but the geology of it. "Price is a very murky window with which to figure out what's happening with oil supply," says Ken Deffeyes, a retired Princeton geology professor and leading peak-oil proponent.Peak-oil theory says that when half of the world's oil has been pumped out of the ground, oil production is at its peak. A steady ratcheting up of oil prices ensues as demand outpaces supply. When that happens won't be known for sure until years after the fact. Meantime, demand for oil is running so close to supply, plenty of other things can make for sharp price movements, says Mr. Deffeyes.



http://www.goodwillpromo.org/

http://www.satruck.org/ValueGuide.aspx

http://www.itsdeductible.com/

He estimates that oil production peaked on Dec. 16 last year, close to his long-held prediction that it would peak on Thanksgiving 2005. Depending on which production figures you look at, his timing looks iffy, at best. Then again, when somebody accustomed to thinking in geological time offers such a precise estimate, he's probably pulling somebody's leg.Peak oil got its start with the late M. King Hubbert, a Shell Oil geophysicist who determined that when an oil field was half depleted it had hit peak production and was set for a decline. He estimated in 1956 that U.S. oil production would peak around 1970. "Hubbert's Peak" was scoffed at in the oil business. Mr. Deffeyes, who worked under Mr. Hubbert in the late 1950s and early 1960s, was one of the few geologists who reckoned Mr. Hubbert was right. Which he was -- U.S. oil production peaked around 1970.Critics argue that applying Hubbert's theory to the entire world is wrongheaded. There could be undiscovered reserves out there. In September, a group of oil companies announced that they had drawn oil from deep within the Gulf of Mexico, opening what could be the biggest source of U.S. oil since Alaska's Prudhoe Bay.Mr. Deffeyes he suspects that major new finds can help ease a decline in global production, but not stop it.The answer to whether he's right won't be found in any price chart, but in the ground.

19. Peak oil theory says _____.a. that when half of the world's oil has been pumped out of the ground, oil production is at its peak Correctb. that there are always undiscovered reserves to maintain peak production of oilc. that when an oil field was half depleted it had hit peak production and was set for a decline d. Both b and c

Trading on the Enron MystiqueBy ANN DAVIS November 14, 2006; Page C1http://online.wsj.com/article/SB116346968528722257.html

Enron is dead. Long live Enron.Five years after the Texas energy-trading giant collapsed, the traders behind some of Enron Corp.'s brashest efforts to carve out new markets are pushing further into those frontiers.Enron alumni have joined hedge funds and trading operations capitalizing on fast-growing commodity markets that the company once dominated or helped develop, from its stronghold of natural-gas and power trading to experimental futures markets in pollution-emission credits and weather contracts. A few Enron refugees have even joined industrial or consumer-goods firms, where they negotiate contracts to reduce the risks of volatile energy, food and raw-materials prices.The growth of commodity markets popularized by Enron, and the ability of its veterans to raise money in budding areas, is to some a validation of at least part of the company's model: trading commodities of all kinds.



"In the general population, there is an Enron stigma. In the trading community, there is Enron mystique," says Vince Kaminski, a former quantitative expert at Enron. After Enron's Chapter 11 bankruptcy filing five years ago next month, the sought-after risk guru moved to hedge-fund giant Citadel Group, and then to Citigroup Inc.'s commodities desk. He now teaches prospective energy traders at Rice University.Before imploding amid accounting-fraud accusations, Enron plowed big sums and talent into markets criticized after its fall as quixotic or a distraction from its core business of transporting and selling energy. It even had investigated whether it could launch movie-box-office futures as a way for studios to manage the risks of a big flop, a former Enron executive who panned the idea recalls.While most markets besides gas and power weren't big moneymakers for Enron, ex-traders today are piggybacking on the company's early investments in everything from pulp-and-paper products to coal trading. And they are finding their background a selling point, much as the collapse and bankruptcy of junk-bond pioneer Drexel Burnham Lambert launched dozens of careers elsewhere in the 1990s."Employers look at having worked at Enron as a risk-management experience, and they think people might have learned from the Enron mistake and those traders might have become better," says Michael Karp, chief executive of Options Group, an executive-search firm that works for many banks and hedge funds. The traders' renaissance comes as some Enron executives from other areas of the company have forfeited assets and begun serving prison terms. Even Enron trading veterans whose reputations were tarnished by criminal and civil probes are making inroads.Former high-ranking executive Lou Pai, who oversaw Enron's efforts to push into a number of new trading markets, has put some of his Enron-related earnings to work as a silent backer of a Houston-area firm prominent in brokering pollution-emission credits, Element Markets LLC, court documents show.Mr. Pai left Enron before its troubles came to light, selling hundreds of millions of dollars of stock to meet a divorce settlement, according to interviews and legal records and proceedings. He still faces civil litigation and potential regulatory scrutiny for his role in Enron's financial management, lawyers following Enron matters say.His affiliation with Element Markets emerged after he attempted this spring to buy a portfolio of emissions credits from an Enron unit operating in bankruptcy protection. Officials of the Enron estate overseeing the sale alleged that Mr. Pai failed to disclose his identity as a former company insider in an auction. They said selling to a former insider posed a conflict and sold to another buyer.Mr. Pai nonetheless landed the assets; he repurchased them from the winning bidder without Enron's knowledge, according to a consultant advising the Enron estate. Now Mr. Pai is working to break into trading carbon-dioxide emissions, several Enron veterans familiar with his plans say. Mr. Pai didn't return calls to his home or office.David Delainey, a former high-ranking trading executive, pleaded guilty to insider trading in connection with Enron's collapse. Nevertheless, Louis Dreyfus Energy Services, an arm of privately owned global commodity merchant Louis Dreyfus, hired him to oversee a trading operation in Calgary, Alberta. Mr. Delainey was sentenced last month by a federal judge in Houston to 2½ years in prison. He didn't respond to interview requests before his sentencing.


Citigroup snapped up Stuart Staley, a successful coal trader at Enron. Mr. Staley, 40 years old, now runs the gas- and power-trading operations of Citigroup from Houston, where traders he sought to hire already resided or wanted to return. Lehman Brothers Holdings Inc. and Bear Stearns Cos. are building energy-trading operations in Houston, among other cities, with former Enron traders. Barclays PLC's Barclays Capital unit and Deutsche Bank AG employ former high-level Enron traders.Constellation Energy Group Inc., a large energy merchant, is ramping up its trading of coal and emissions credits in the U.S. and Europe with former Enron traders. Tyson Foods Inc., the meat and poultry producer, hired an Enron trader to run its commodity-trading and risk-management operations.Nowhere is the Enron "mystique" stronger than with 32-year-old trader John Arnold, who founded hedge fund Centaurus Energy LP in Houston with $8 million a few years ago and employs other Enron alumni. The firm now has an estimated $3 billion in assets and would be larger if Mr. Arnold hadn't returned many investors' cash and winnings to keep his fund from growing unwieldy, investors and traders say.Primarily a natural-gas trader, Mr. Arnold did well last month in volatile markets even as rival Brian Hunter at Amaranth Advisors LLC suffered multibillion-dollar trading losses, commodities players familiar with Centaurus's performance say.Investors are rushing to back other Enron veterans. A Chicago-based fund of hedge funds has invested in a firm called Top Shelf Capital in Calgary, operated by senior former Enron trader John Lavorato and an Enron colleague, Jonathan McKay. They declined interview requests.A former colleague of Mr. Hunter at now-liquidating Amaranth, Harry Arora, also was an Enron trader. Mr. Arora founded a new hedge fund, ARCIM Advisors LLC, this summer while Amaranth was still doing well.Also hanging out a shingle: Jeff Shankman, the former president and chief operating officer of Enron's second-largest trading division. He is launching his energy-focused hedge fund, Trident Asset Management, this week.Enron "created a fantastic alumni network," says Mr. Shankman, 39. "The thing I regret most at Enron is having to defend my tenure there," when "most of us were hardworking, decent people who did our best for a company we believed in."Mark Tawney and another Enron alumnus, Bill Windle, were involved in Enron's early efforts to structure weather instruments for energy companies and other firms with payouts based on precipitation and temperature that affect their businesses. They moved on to insurance giant Swiss Re to build up its weather desk and then left to form a weather-derivatives-trading hedge fund in Houston last year. After finding that the capital-intensive transactions worked best with a large financial institution as a credit partner, they returned investors' money and have just launched a weather-risk-management desk in Houston for a unit of RenaissanceRe Holdings Ltd., a Bermuda reinsurer.

20 Former employees of Enron _______.a. are finding it impossible to find employmentb. have a fantastic alumni networkc. have joined hedge funds and trading operations capitalizing on fast-growing commodity markets that the company once dominated or helped develop


d. Both b and c Correct

ServiceMaster Attracts Eyes of Buyout FirmsBy DENNIS K. BERMAN and ILAN BRATNovember 15, 2006; Page C1http://online.wsj.com/article/SB116355969312923494.html

Private-equity firms are circling ServiceMaster Co., a $3.2 billion company that has weaved a religion-based business ethos through its home-services outlets.Although ServiceMaster doesn't have a process for fielding buyout inquiries, some on Wall Street are openly talking about ServiceMaster as being "in play." Buyout firms' interest, coupled with some behind-the-scenes shareholder unrest, could push the company to make some major changes in the months ahead. At least some people following ServiceMaster suggest that a management-led buyout of the Downers Grove, Ill.-based company is another possibility.ServiceMaster is the kind of business that private-equity firms love -- generating plenty of cash with minimal capital expenditures required. ServiceMaster owns and franchises local Terminix pest control outlets, TruGreen lawn service, and MerryMaids housecleaning businesses -- some 5,500 individual locations in all. Over the past 12 months, the company generated nearly $400 million in earnings before interest, taxes, depreciation and amortization, on sales of $3.4 billion. At the same time, it spent just $47 million on capital improvements.A company spokesman declined to comment, saying that he didn't discuss market rumors. Clues about the company's future could come at a presentation to investors in New York later this month.Any buyout offers, or other corporate changes, could push up the stock price, which has been languishing lately. At $11.28 on the New York Stock Exchange yesterday, the shares are down about 5% during 2006, compared with a 12% gain in the Standard & Poor's 500-stock index. Over the past five years, the shares declined about 4%, compared with a nearly 24% gain for other services companies tracked by data provider Baseline.ServiceMaster represents an intriguing takeover target. Its cash flows are especially attractive to buyout firms, who use a company's cash flows to pay down the debt used to purchase it. Still, its culture may make some buyout firms uncomfortable. There is an 11-foot statue of Jesus washing the feet of a disciple at its headquarters, and "honor[ing] God in all we do" is its first corporate objective.For all the attraction of its business model, ServiceMaster has continued to struggle. Some wonder if the company can continue growing at its previous pace. Last month, ServiceMaster said it would miss its predictions for third-quarter and full-year results. It said an excessively warm summer hurt its lawn-care businesses and falling sales of existing homes decreased demand for home-services contracts. Fewer termite infestations also reduced its Terminix business.From 1970 through 1998, earnings grew at a compound annual rate of 20% and revenue at 19%, according to Matthew Litfin, an analyst with William Blair & Co. Lately, the company hasn't met expectations of growth in the low double-digits.In 1999 earnings declined, as the company faced shrinking profits at units that served institutions, like schools and hospitals, and slowing sales growth in its lawn-care



business. Also constraining growth have been recent government restrictions on telemarketing, which used to be a big emphasis for the company.ServiceMaster has attracted the attention of Ariel Capital Management, an investment-management firm that has built up a greater than 10% stake in the company. Ariel has voiced frustration with the company's performance, people familiar with the matter said. An Ariel spokesman declined to comment.Last year Scotts Miracle-Gro Co. expressed a desire to purchase ServiceMaster but was rejected, according to people familiar with the matter. A Scotts spokesman declined to comment.Alexander Paris Jr., director of research at Chicago-based Barrington Research Associates Inc., says a buyout is plausible. "It's still a good company with a lot of good brands that really hasn't been performing well," he says. "It's not as if earnings are crashing. They're just not growing."He adds: "If they're not going to use their stock to make acquisitions, and they're able to fund their growth through internally generated cash, what do you need to be public for?"ServiceMaster has its roots in a moth-proofing business started in 1929. It later expanded into rug cleaning and then managing housekeeping staff for hospitals. The founder, an evangelical Protestant and subsequent leaders have incorporated what it calls a "values-based" element to the company.As the company weighs its future, it raises a question for investors: Can the company put itself on the block and still keep its religious culture? Though the board meetings still start off with a prayer, says Mr. Paris, "It's not like it once was. It's less Christian than it used to be."As a publicly traded firm, ServiceMaster would have to take the highest offer on the table -- an offer that may or may not come from a buyer friendly to its tradition. Those facts might suggest that a straight-ahead auction may not be the path it pursues.

21. ServiceMaster’s first corporate objective is ___________. a. honor God in all we do Correct b. wash the feet of all customersc. be a Merry Maid!d. Terminix all competition

Islamic-Bond Market Becomes Global By Attracting Non-Muslim BorrowersBy KAREN LANENovember 16, 2006; Page C1http://online.wsj.com/article/SB116361223362324035.html

SINGAPORE -- When Texas-based energy firm East Cameron Partners wanted to raise cash this year, it turned not to banks or the domestic bond market, but to the Middle East. The result was the first bond backed by U.S. assets that adheres to Islamic laws against paying or charging interest."I had never heard of sukuk before," says Campbell Evans, the Houston company's general manager, using the Arabic name for Islamic bonds. "I got a book [about it] and it seemed Byzantine. But at the end of the day, it worked for us."



Islamic financing differs from conventional financing in its strict adherence to Shariah, or Islamic law, which calls for ethical and equitable financing, and bans speculation.Conventional bonds issued by companies or governments pay a fixed annual interest rate for the life of the bond, which can be as many as 10 or even 30 years, after which the principal is repaid. Some bonds are backed by assets such as mortgages or credit-card receivables. If the issuer defaults, the assets are sold to recoup some bondholder losses.Sukuk are similar to asset-backed bonds, but instead of a fixed annual interest rate, payouts to investors over the life of the bond are derived from leases, profits or sales of tangible assets such as property, equipment or a joint-venture business. These leases, profits or sales can be structured to deliver the equivalent of a fixed annual interest rate, yet they technically aren't the forbidden "interest" payment.Western and Asian companies and governments are increasingly using Islamic bonds to tap a well of petrodollars in the Middle East. A rising queue of Persian Gulf-based borrowers are doing the same to raise cash overseas, particularly for large infrastructure projects needed to diversify their sources of economic growth.As a result, the Islamic finance market is swiftly expanding globally. With both Islamic and conventional banks seeking a piece of the action, it is building bridges between Muslim and non-Muslim nations.According to London's Islamic Finance Information Service, $16.9 billion in sukuk was issued between January and October this year, 43% more than the total in 2005. Analysts say there is easily $10 billion in the pipeline for the next few months.The market is relatively tiny. In the first half of 2006, new sales of international bonds and short-term notes totaled $1.2 trillion, according to the Bank for International Settlements.New rating and hedging tools are expected to help the Islamic bond market expand faster.East Cameron Partners, Mr. Evans's Houston energy firm, raised $166 million in its July issue to consolidate assets and fund development of gas fields. "The sukuk represented over and above what might be available in America in terms of being able to raise the cash at relatively lower coupons," or payouts to investors, Mr. Evans said."An Islamic bond would be easily placed with conventional investors, which can widen the investor base, whereas the opposite isn't true," said Roula Sleiman, senior associate at Lebanon's Bemo Securitization SAL, which arranged the deal with Merrill Lynch & Co.Malaysian borrowers, including state-owned investment company Khazanah Nasional, have marketed Islamic bond deals in the Middle East. So has the Pakistani government, selling $600 million in bonds in 2005. In Japan, Bank of Tokyo-Mitsubishi UFJ Ltd., the core banking unit of Mitsubishi UFJ Financial Group Inc., is allying with Malaysian bank CIMB Group Bhd. to sell financial services, including potential Japanese corporate sukuk.

22. Islamic financing differs from conventional financing in its strict adherence to ____.a. Shariah Correct b. high interest ratesc. 2 year loansd. cash only transactions

Low Oil Prices, Modest Inflation Fuel Dow Record


By PETER A. MCKAYNovember 17, 2006; Page C1http://online.wsj.com/article/SB116373148505325914.html

Moderate inflation and a plunge in oil prices to a one-year low pushed the Dow Jones Industrial Average to another record.The blue-chip average climbed 54.11 points, or 0.4%, to 12305.82, up 15% year to date. The Standard & Poor's 500-stock index rose 0.2%, or 3.19 points, to 1399.76, shy of its first close above 1400 since November 2000. The broad-based index is up 12% this year.The Nasdaq Composite Index rose 0.3%, or 6.31 points, to 2449.06, up 11% year to date.In the session's most anticipated piece of economic news, the Labor Department reported that its consumer-price index, excluding volatile food and energy prices, rose 0.1% in October, shy of Wall Street's consensus expectation for an increase of 0.2%.Compared with the year-earlier period, the so-called core inflation rate is 2.7%, above the 2% level that the Federal Reserve considers the upper limit of acceptable annual growth in prices throughout the economy. October's reading was shy of the 3% level some analysts believe would trigger widespread worries that an interest-rate increase by the Fed is imminent."The readings are still too high for the Fed to ease rates, but at least for the day, the market is less worried about the worst-case scenario," said Jim Paulsen, chief investment strategist at Wells Capital Management. He cautioned that he still believes economic growth will push inflation readings higher in the months ahead, eventually prompting the Fed to tighten.Energy traders bid the expiring December futures contracts for crude oil sharply lower, off $2.50, or 4.3%, to $56.26 a barrel, down 7.8% year to date at the New York Mercantile Exchange.Warmer weather and mixed reports about the Organization of Petroleum Exporting Countries' output helped to nudge prices lower. To avoid taking delivery of actual oil, many traders had to sell December futures to move their purely financial bets into January futures, said Alaron Trading analyst Phil Flynn.He said such selloffs have become more common in the past 18 months or so -- a period in which contracts for long-term crude delivery have usually traded at a premium to contracts for immediate delivery. "This is getting to be a common theme in the oil market," said Mr. Flynn. "I call it expiration ugly, or expiration madness."Outside the U.S., stocks fell in dollar terms. The Dow Jones World Stock Index, excluding U.S. shares, fell 0.02%, or 0.05 point, to 231.54.

23. Moderate inflation and a plunge in _______ pushed the Dow Jones Industrial Average to another record.a. food pricesb. housing pricesc. oil prices Correct d. the number of hurricanes

Questions 24 – 26 from Personal Journal, Section D



Banks Pile Into Health Savings Accounts By ANN CARRNSNovember 14, 2006; Page D1http://online.wsj.com/article/SB116347277363522311.html

Just in time for benefits-enrollment season, health savings accounts are getting a big push from your local bank.Nearly 1,100 banks now offer the tax-favored spending accounts; more than triple the number at the end of 2005, according to market-research firm Information Strategies Inc. The growth comes as more employees enroll in high-deductible health plans, which are paired with health savings accounts, or HSAs, to help pay for the deductible and other out-of-pocket medical costs. But savings not needed to pay medical expenses can accumulate in a HSA for years, and this has sparked bank interest in offering such accounts.The abundance of new HSA offerings is triggering competition that is helping to push fees lower and expanding the options for consumers to invest their savings. Most HSAs previously earned interest, sometimes at relatively low rates. Now, banks increasingly are offering other investment options, including mutual funds, if consumers have a minimum required balance.Among other options: Bank of America Corp. is expected to announce this week that it will introduce a new credit card, in partnership with major health plans, that will let holders earn rewards points that convert automatically into cash in their HSAs. And in January, the bank's customers will be able to invest their HSA balances in mutual funds offered by the bank's Columbia Management arm.J.P. Morgan Chase & Co., which previously marketed its HSAs primarily through employers, will begin later this month to allow individuals to enroll for the accounts online. The bank also offers mutual-fund investments to its HSA holders.The abundance of new offerings means consumers interested in a HSA need to shop around. The accounts vary widely in their structure and fees. Initial setup charges are $10 to $20 at Chase, for instance, but free at U.S. Bancorp. Ongoing monthly fees are $4 at BB&T Corp., but free at Huntington Bancshares Inc. Not all banks disclose the fees on their Web sites, while others make the information frustratingly hard to find.It doesn't help that interest rates paid on the balances in HSAs vary widely. HSA Bank, of Sheboygan, Wisc., which specializes in health savings accounts and has customers in all 50 states, pays 1.98% interest on an average daily balance of $1,000, although rates are higher for bigger balances. Chase's current rate is 4.11%, regardless of the balance, while Bank of America pays 2.96%. Some banks offer a tiered system, including BB&T, which pays 1.49% for balances up to $2,499. That jumps to 4.47% for balances of $25,000 and greater.The widening availability of HSAs is expected to help propel the total number of accounts by year end to about 3.6 million, holding $5 billion in combined deposits, according to Information Strategies. That's up from 1.1 million accounts and deposits totaling $1.2 billion at the end of 2005. The accounts are fairly new -- Congress first authorized them in 2003 -- so the number of account holders is still a small proportion of health-plan enrollees overall.



HSAs are funded with pretax money, and income continues to grow tax free. What's more, account holders don't have to pay taxes on withdrawals as long as the money is used for qualified medical expenses. However, withdrawals to pay for other expenses are taxed, and the account holder will likely also have to pay a penalty. Because the penalty disappears after an account holder turns 65, HSAs are increasingly being used as a tax-deferred savings vehicle to help cover both medical and non-medical expenses in retirement.

24. HSA stands for a. Helpful Separate Accountb. Health Sentinel Accountc. Hoarded Secret Accountd. Health Savings Account Correct

What's on the Agenda For Student AidBy ANNE MARIE CHAKERNovember 15, 2006; Page D1http://online.wsj.com/article/SB116355935114523491.html

College affordability is high on the agenda for the newly elected Democratic leadership in Congress, and that could mean good news for families worried about the rising cost of college.Among the measures Democrats have proposed, is halving the interest rate on some federal student loans, which could save students thousands of dollars over the term of their loans. Parents could benefit from a proposal to allow tax deductions for tuition paid by families earning up to $160,000 a year. And lower-income families could get added help from a possible expansion of the federal Pell Grant program.Rep. Nancy Pelosi, the likely new House speaker, has set college affordability as one of a handful of priorities in the Democrats' New Direction for America program. To build momentum, Democrats are including the proposed student-loan rate cut among a number of measures they plan to introduce on the first day of the new Congress and to pass within the first 100 hours Congress is in session. (Other measures on the "100 hours" list include raising the minimum wage and rolling back subsidies for big oil companies.)The Democrats' college-affordability proposals are expected to gain backing from outside the party. "Pelosi has picked apple-pie issues in higher ed that both sides of the aisle can come around," says Sarah Flanagan, vice president for government relations at the National Association of Independent Colleges and Universities. "But the debate will be whether it's the best use of scarce federal resources," she says. Indeed, the Republican-led Congress this year lopped nearly $12 billion from student-lending programs as part of a deficit-reduction act, infuriating Democrats.Some of the proposals may draw opposition from banks and other for-profit lenders if the interest rate reductions eat into their profits. While Democrats haven't yet said so, "we are nervous that they will attempt to...reduce lender returns," says John Dean, special counsel for the Arlington, Va.-based Consumer Bankers Association, a group of student-loan providers.



Some experts also say the Democrats' proposals could encourage colleges to raise tuition further. "Anytime you make it easier, cheaper for kids to borrow money...that tends to push prices up," says Richard Vedder, director of the Center for College Affordability and Productivity in Washington.Despite the efforts to make higher education more affordable, paying for college likely will continue to become increasingly difficult for many students. Average total tuition and fees at four-year private colleges increased 5.9% to $22,218 in the current academic year. The average undergraduate leaves school more than $20,000 in debt, compared with about $16,000 in 1999-2000, according to an analysis of the Education Department's National Postsecondary Student Aid study.What's more, caps on how much federal assistance is available per student means that students could continue to rely more heavily on private student loans, which typically carry higher interest rates. In the last academic year, private student lending, which is separate from federal loans distributed through banks, amounted to about $17 billion in new loans, up more than three times since 2001-02. Federal student loans originated in the 2005-2006 academic year totaled $69 billion.The federal government's student-lending programs include the popular Stafford loans, which allow students to borrow as much as $23,000 for an undergraduate education and $65,500 for undergraduate and graduate school combined. Other programs include the Parent Loan for Undergraduate Students and the Pell Grant, which gives needy students money that doesn't have to be repaid. Loans are either issued directly to students or are distributed through private lenders.Democratic leaders may scale back some of their ambitions in a bid to help move measures through Congress. The New Direction document calls for cutting interest rates in half for student and parent loans. But now Democratic aides say lawmakers might seek to cut rates only for certain student loans. Rep. George Miller (D., Calif.), expected to be named leader of the House education committee, said in a post-election statement last week that among the "first three priorities" for the committee is to improve college affordability by cutting interest rates in half on student loans.Stafford loans currently carry an interest rate of 6.8%. For a typical $20,000 loan over 10 years, cutting that rate in half would save a student about $4,000, according to an analysis by Mark Kantrowitz, publisher of FinAid.org.Democrats also want to raise the limit that needy students can receive from the Pell Grant program to $5,100 a year from $4,050, which has been the limit for four years. Sen. Edward Kennedy (D., Mass.), who will head the Senate education committee, has unsuccessfully tried to raise that cap in recent years. President Bush in his 2000 election campaign spoke about an increase in the Pell Grant program, when he said he would raise the limit to $5,100, but just for first-year students. That promise never materialized.Rep. Miller and Sen. Kennedy helped introduce legislation last year that would have provided financial incentives for schools that encourage students to borrow directly from the government, rather than obtain federal loans that are distributed through private banks. The lawmakers are expected to revive the idea. Currently, just one-fourth of federal loans are made directly to students. Democrats point to reports by the Congressional Budget Office and the Government Accountability Office that say direct lending saves the government money, though those reports are contested by the loan industry.


25. Democrats hope to ______.a. cut interest rates in half for certain kinds of student loans Correctb. increase tuition rates at state universitiesc. decrease limits on Pell Grants d. encourage students to borrow directly from private banks instead of the government

For Adults With Learning Disabilities, The Hardest Part of a Job Is Keeping ItNovember 16, 2006; Page D1http://online.wsj.com/article/SB116363659516124529.html

Dan Edmonston, a college graduate who enjoys customer service, tries to hide his ADD on the job to avoid being stigmatized. He and his family members say he has a strong work ethic, but he has been fired a half-dozen times anyway, by employers who don't understand why he has trouble with distractions and disorganization.The 36-year-old security guard continues to stay underground at work because he doesn't believe employers will support a worker with a hidden impairment like attention deficit disorder. "For somebody who is in a wheelchair or blind," employers might provide accommodations, says Mr. Edmonston, who has lost a string of retail and service jobs. "But not for somebody like me."As the growing number of students diagnosed with learning disorders such as dyslexia, ADD and cognitive processing impairments enter the work force, some say they are experiencing serial firings and layoffs. My recent column on a related topic1 drew a torrent of email from such employees who had lost many jobs. While no one measures firings among workers with learning disorders, several attorneys I interviewed said complaints about it are on the rise.Caught in limbo between a fear of being stigmatized, and the risk that their disorders will hurt their job performance unless they receive accommodations, many try to hide their impairments at work. But the strategy often backfires, getting them fired anyway because of performance problems linked to their impairments. If they disclose their disorders at that point, "employers generally look at that as an excuse," says David Deratzian, a Bethlehem, Pa., attorney and co-chairman of the disability-rights committee of the National Employment Lawyers Association.More employers might accommodate such workers if they asked before they started having problems on the job, says David Fram, director, National Employment Law Institute, a Denver nonprofit that provides training to employers. In his seminars, managers often ask what to do about "individuals with learning disabilities who are performing badly," he says.Experts describe the pattern as a Catch-22. "One of the hidden costs is underemployment," says Paul Gerber, an education professor at Virginia Commonwealth University, Richmond, Va., who has studied the topic extensively. Many rely on family members or job coaches for support. The pattern also calls for a new, more proactive strategy for communicating about learning disorders on the job.Some people with learning impairments become highly successful by "finding a niche, a specific area where they can excel," says Gary Phelan, a Stamford, Conn., attorney and author on disability-rights issues. JetBlue Airways CEO David Neeleman, whose ADD


http://online.wsj.com/article/SB116061655167690067.html?mod=Work-Family


wasn't diagnosed until adulthood, did poorly in school and was once fired from a vice president's job at Southwest Airlines because he lacked diplomacy. Mostly, though, he has managed to make his restless workstyle an asset; "I've realized the importance of surrounding myself with knowledgeable people" who can attend to the details he misses, Mr. Neeleman says through a spokesman. His weekly flights on JetBlue planes, talking to customers and cleaning cabins, have become emblematic of an emphasis on quality. A few years ago, he even hired at JetBlue the Southwest manager who had axed him.Many workers fall back on family members for help, says Joseph Madaus, assistant professor of educational psychology at University of Connecticut. In the interest of full disclosure, I have a son, 16, who has minor learning disabilities.Cleveland attorney Bob Chernett hired his stepson, an accountant with ADD, as a receptionist after he was fired from several jobs, to provide some coaching. His stepson has many skills but tended to miss social cues or interrupt co-workers, Mr. Chernett says. He often had no idea why he'd been fired.Mr. Chernett taught him to communicate more by succinct emails. Also, he showed him how to pick up on co-workers' signals that they needed to be left alone. After a year of coaching, "he was much more prepared to work in an office and know the proper decorum." Mr. Chernett says.Dr. Gerber urges these workers to seek what he calls "goodness of fit" -- a job that suits their personality and abilities, at an employer with a proven ability to integrate workers with disabilities. Law firm Baker Botts, where managing partner Walt Smith has a cognitively disabled son, encourages all its U.S. offices to employ workers with a variety of disabilities and trains supervisors in making accommodations.A more proactive way of communicating about learning impairments on the job can also help. Workers should describe their disorder in a succinct, factual way, then quickly move on to describe exactly what they need, Dr. Gerber says. For example: "I have a learning disability, and that means I have problems adding up columns of numbers. But all I need is a different calculator and a little more time to complete these reports." This helps prevent the listener from thinking the disability is more severe than it is.

26. Some people with learning disabilities in the workplace ______.a. experience serial firings and layoffsb. become highly successful by "finding a niche, a specific area where they can excel”c. need to find a job that suits their personality and abilitiesd. All of the above Correct


Documents

The Wall Street Journal Weekly Quiz · Web viewUS Airways Group Inc.'s $8.67 billion hostile takeover bid for Delta Air Lines suggests that the long-predicted frenzy of consolidation