Please find my answer explanations below:
1. Conclusion - The author thinks that wage and price controls damage economy's prospects for long-term growth.
A - Correct (Seems best of all)
B - Irrelevant to the conclusion
C - Weakens, as the author says it helps to avoid recession
D - Weaken, as the author says they do not deal with underlying causes of inflation
E - Weaken, because if the policy makers thought about long term economic goals, they would have not used wage and price controls.
2. "They point out that in the 1980's, many European countries and the United States conquered high (by these countries' standards)"
A - Incorrect
B - Incorrect
C - Incorrect
D - Incorrect
E - Correct
3. The primary purpose of the passage is to Main Idea (1st two lines):
It is actually not possible to decrease inflation without causing a recession and a corresponding increase in unemployment
Some keywords which point this out: Orthodox, most economists Mapping:
Majority agree that tight monetary and fiscal policies reqd --> to reduce Inflation
(they might be supporting I-Theory or R-Theory BUT in the end agree on the above point)
US/Europe example provided to strengthen the above.
Some say that controls on wages and prices can decrease inflation without causing a recession (and dont support tight monetary and fiscal policies) --> This approach fails due to the reasons provided in the last line. A - apply two conventional theories.
Although 2 theories are mentioned (Inertia, Rational), they are not main point of the entire passage. The author only uses these theory to say something about the economists (economist
support either of the two viewpoints) B - examine a generally accepted position
This is not directly stated but if you consider the Big Picture this is indeed the answer. The word orthodox (conventional, generally accepted beliefs) signals this. C - support a controversial policy
The author mentions a policy to which most economist
agree (1st half), so there is no controversy as such D - explain the underlying causes of a phenomenon
The author is not giving his viewpoints and justifying/detailing them. He is just presenting some facts and viewpoints of the economists. E - propose an innovative solution
There is no innovation as such.
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