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GMATPREP ChallengeQ -Many people believe that because wages

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GMATPREP ChallengeQ -Many people believe that because wages [#permalink] New post 12 Aug 2014, 03:45
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Passage-11 GMATPrep RCs-Collection(Main article)
Many people believe that because wages are lower in developing countries than in developed countries, competition from developing countries in goods traded internationally will soon eliminate large numbers of jobs in developed countries. Currently, developed countries' advanced technology results in higher productivity, which accounts for their higher wages. Advanced technology is being transferred ever more speedily across borders, but even with the latest technology, productivity and wages in developing countries will remain lower than in developed countries for many years because developed countries have better infrastructure and better-educated workers. When productivity in a developing country does catch up, experience suggests that wages there will rise. Some individual firms in developing countries have raised their productivity but kept their wages (which are influenced by average productivity in the country's economy) low. However, in a developing country's economy as a whole, productivity improvements in goods traded internationally are likely to cause an increase in wages. Furthermore, if wages are not allowed to rise, the value of the country's currency will appreciate, which (from the developed countries' point of view) is the equivalent of increased wages in the developing country. And although in the past a few countries have deliberately kept their currencies undervalued, that is now much harder to do in a world where capital moves more freely.
1. The passage suggests that which of the following would best explain why, in a developing country, some firms that have raised their productivity continue to pay low wages?
A. Wages are influenced by the extent to which productivity increases are based on the latest technology.
B. Wages are influenced by the extent to which labor unions have organized the country's workers.
C. Wages are not determined by productivity improvements in goods traded internationally.
D. The average productivity of the workers in the country has not risen.
E. The education level of the workers in the country determines wages.
[Reveal] Spoiler:
Soon


2. The primary purpose of the passage is to
A. identify the origin of a common misconception
B. discuss the implications of a generally accepted principle
C. present information relevant in evaluating a commonly held belief
D. defend a controversial assertion against a variety of counterarguments
E. explain under what circumstances a well-known phenomenon occurs
[Reveal] Spoiler:
Soon


3. The passage suggests that if the movement of capital in the world were restricted, which of the following would be likely?
A. Advanced technology could move more quickly from developed countries to developing countries.
B. Developed countries could compete more effectively for jobs with developing countries.
C. A country's average wages could increase without significantly increasing the sophistication of its technology or the value of its currency.
D. A country's productivity could increase without significantly increasing the value of its currency.
E. Workers could obtain higher wages by increasing their productivity.
[Reveal] Spoiler:
Soon


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Re: GMATPREP ChallengeQ -Many people believe that because wages [#permalink] New post 12 Aug 2014, 04:36
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Time taken 7 mins.

2. The primary purpose of the passage is to
C. present information relevant in evaluating a commonly held belief
"Many people believe that because wages are lower in developing countries than in developed countries, competition from developing countries in goods traded internationally will soon eliminate large numbers of jobs in developed countries.
blah blah
When productivity in a developing country does catch up, experience suggests that wages there will rise.
"


3. The passage suggests that if the movement of capital in the world were restricted, which of the following would be likely?
D. A country's productivity could increase without significantly increasing the value of its currency.
"if wages are not allowed to rise, the value of the country's currency will appreciate, which (from the developed countries' point of view) is the equivalent of increased wages in the developing country. And although in the past a few countries have deliberately kept their currencies undervalued, that is now much harder to do in a world where capital moves more freely."

Having tough time with Q1.
Regards.
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Last edited by PiyushK on 13 Aug 2014, 20:29, edited 1 time in total.
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Re: GMATPREP ChallengeQ -Many people believe that because wages [#permalink] New post 12 Aug 2014, 05:15
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1. The passage suggests that which of the following would best explain why, in a developing country, some firms that have raised their productivity continue to pay low wages?
A. Wages are influenced by the extent to which productivity increases are based on the latest technology. We are looking for avg productivity of the whole country.
B. Wages are influenced by the extent to which labor unions have organized the country's workers. No mention of labour unions in the passage
C. Wages are not determined by productivity improvements in goods traded internationally. We are looking for avg productivity of the whole country.
D. The average productivity of the workers in the country has not risen. Bingo. That is what the bracketed part in the 12th line says.
E. The education level of the workers in the country determines wages. We are looking for avg productivity of the whole country.

2. The primary purpose of the passage is to
A. identify the origin of a common misconception Not discussing the "origin". Its more of a debunking of a misconception.
B. discuss the implications of a generally accepted principle Passages challenges the principle.
C. present information relevant in evaluating a commonly held belief Bingo.
D. defend a controversial assertion against a variety of counterarguments It takes an popular assertion and presents various counterarguments to debunk that assertion
E. explain under what circumstances a well-known phenomenon occurs Doesnt say anything about circumstances about a phenomenon. It presents cases when the "phenomenon" may not hold.

3. The passage suggests that if the movement of capital in the world were restricted, which of the following would be likely?
A. Advanced technology could move more quickly from developed countries to developing countries. Advanced technology might be better adopted in the developing country.
B. Developed countries could compete more effectively for jobs with developing countries. It doesnt say that
C. A country's average wages could increase without significantly increasing the sophistication of its technology or the value of its currency. It has to increase its sophistication
D. A country's productivity could increase without significantly increasing the value of its currency.Productivity=Avg wages*Currency Value. To increase productivity and keeping one constant, we need to increase the other factor. The passage seems to suggest that developing countries like to undervalue their currencies. So productivity can only be achieved by increasing wages. Close call. Lets put this aside for the moment. Doesnt sound exciting
E. Workers could obtain higher wages by increasing their productivity. Bingo. This can only be done by increasing avg wages if the country wants to keep the currency low (this can happen if the capital is restricted.
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Re: GMATPREP ChallengeQ -Many people believe that because wages [#permalink] New post 25 Aug 2014, 11:46
My take

1.D
2.C
3.D (got stuck with this one) - if the capital is restricted then its easier for the countries to undervalue their currency and improve productivity with the help of advancements in technology. - This is my reasoning (need help with this option)
Re: GMATPREP ChallengeQ -Many people believe that because wages   [#permalink] 25 Aug 2014, 11:46
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