Question 1 - 4 are based on the following passage.

    The bailout of the Chrysler Corporation by the federal government in 1979 was widely hailed as a success. Four years later Chrysler was profitable again, and proponents of the claimed that it had saved Chrysler from bankruptcy without costing the taxpayers one penny. But a closer examination of the facts of the case leads to a more complicated picture.

    In 1979 Chrysler was on the verge of bankruptcy. Thousans of workers had been laid off, creditors were unpaid and the senior management appealed to the administration of Jimmy Carter to provide more than $1 billion in tax rebates. The administration's proposal, however, was not for direct tax relief but rather for federal loan guarantees, which administration officials were initially estimating at a value of $750 million but which ultimately totaled more than $1.2 billion. When in 1983 Chrysler was profitable again, supporters of the bailout claimed that the taxpayers had saved Chrysler from bankruptcy without having spent a dime, since the federal government had not had to pay for any defaulted loans. Chrysler is supposed to pay the government the difference between the guaranteed rate the loans carry and the rate they would have carried had they been issued out the government guarantee.

    This is, however, not entirely the case. In the early 1980s Chrysler was allowed, under the terms of the bailout, to issue federally guaranteed bonds at a rate of 10.35%. The Ford Motor Company, by contrast, was in better shape than Chrysler at the time, but was forced to issue bonds with a rate of 14.5%. It would seem then that Chrysler should have been paying the government a guarantee of at least 4%; in reality, however, Chrysler was only paying the government a guarantee of 1%. Further, the loss of jobs from cuts at Chrysler would have resulted in a reduction of payroll taxes to the federal government.

The purpose of the second paragraph is to ....