Twelve years ago and again five years ago, there were extended periods when Darfir Republic's currency, the pundra, was weak: its value was unusually low relative to the world's most stable currencies. Both times a weak pundra made Darfir's manufactured products a bargain on the world markets, and Darfir's exports were up substantially. Now some politicians are saying that, in order to cause another similarly sized increase in exports, the government should allow the pundra to become weak again.
Which of the following if true provides the government with the strongest grounds to doubt the politican's recommendation, if followed, will achieve its aim?
a) Several of the politicians no recommending that the pundra be allowed to become weak made that same recommendation before each of the last two periods of currency weakness.
b) After several decades of operating well below its peak capcity, darfir's manufacturing sector is now operating at near-peak levels
c) the economy of a country experiencing a rise in exports will become healthier only if the country's currency is strong or the rise in exports is significant.
d) those countries whose manufactured products compete with darfir's on the world market currently all have stable currencies
e) a sharp improvement in the efficiency of darfir's manufacturing plants would make darfir's products a bargain on the world markets even without weakening of the pundra relative to other currencies.
Can someone explain???
It is a 'weaken the plan' question.
What is the plan?
Plan: When currency weakens, exports increase. (Foreigners can buy more using same amount of their currencies so they buy more.) Therefore, in order to cause [highlight]another similarly sized increase in exports[/highlight], the government should allow the pundra to become weak again.
Focus on the highlighted words. The aim is to cause a similarly sized increase in exports. That is what the plan is trying to achieve. On weaken questions, we focus on the conclusion. What the plan is trying to achieve is parallel to conclusion. So we focus on trying to weaken what the plan is trying to achieve. We need to find something that tells us why we will not get a similarly sized increase in exports even if we weaken pundra.
Options a, c, d and e do not talk about the reasons we will not see similarly sized increase in exports.
Option B tells us that darfir's manufacturing sector is now operating at near-peak levels. If this is true, exports cannot increase much because darfir cannot manufacture more than it is manufacturing now. If there are no extra products manufactured, there cannot be extra exports. In previous instances, darfir was manufacturing below capacity so they could manufacture extra products. Hence the plan worked in those instances but this time it may not. Therefore, option (B) is correct.
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