Before we look at (A) and (C), let's eliminate the others:


The author does examine the differences between free and fair trade proponents, but he/she concludes that BOTH are operating under false assumptions. Examining the differences between the two groups is not the primary purpose of the discussion -- instead, the author argues that both groups are operating under false assumptions, and that the conflict between them is paralyzing Arboria's trade policy and preventing Arboria from expanding its trade. Because the discussion of free vs. fair trade is included to SUPPORT this broader point, the differences between the two groups is not the primary purpose of the passage.


The author doesn't criticize the terms of the GATT. He/she just argues that the GATT covers a smaller portion of the world economy, and therefore Arboria should not assume that global commerce is conducted under the conditions of the GATT. (D) is out.


The author discusses Arboria's trade partners ONLY to examine Arboria's trade policies. His/her purpose is not to set up a comparison between the countries, but to look more closely at Arboria's trade policies. (E) is out.

Now let's take a look at the two remaining options:



Let's start with the first couple sentences of the passage:

"Arboria is floundering in the global marketplace, incurring devastating losses in market position and profits. The problem is not Arboria's products, but Arboria's trade policy. Arboria faces the prospect of continuing economic loss until Arborian business and political leaders recognize the fundamental differences between Arborian and foreign economic systems."

The author clearly views Arboria's current trade policy as a "problem" that is hurting Arboria (causing Arboria to flounder and incur devastating economic losses). And unless something changes (i.e. "unless Arborian business and political leaders recognize..."), Arboria will face the prospect of "continuing economic loss."

How did Arboria get into this mess?

"Arboria is operating with an obsolete trade policy"--a trade policy that has NOT shifted even though economic circumstances HAVE shifted radically.

In other words, Arboria's trade policy might have been fine in the mid-1940s, but the policy hasn't adapted as economic circumstances have changed radically. And why hasn't the policy adapted?

"Arboria's trade policy seems paralyzed by the relentless conflict between proponents of “free” and “fair” trade." - If the two sides are completely at odds, it will be really hard for them to agree on potential changes to the trade policy.

To recap, Arboria has an "obsolete" trade policy, one that has left Arboria floundering and incurring devastating losses. The economic loss will continue and Arboria will miss "opportunities for trade expansion" unless something changes. It is clear that the author views the current trade policy as a problem that 1) has and will continue to hurt Arboria economically and 2) is causing Arboria to miss opportunities for trade expansion.

The author does not explicitly call for a reassessment of the trade policy, but he/she certainly explains the consequences of NOT reassessing the trade policy (i.e. continued economic loss and missed trade opportunities). In explaining the dire consequences of NOT reassessing the trade policy, the author communicates an argument FOR reassessing the trade policy (just as I can make the case FOR brushing your teeth by describing all of the negative consequences of NOT brushing your teeth).

Is the author primarily concerned with letting us know that "Arboria is floundering in the global marketplace"? No. The fact that Arboria's position in the world marketplace is eroding simply supports the notion that the current trade policy is a problem that needs to be addressed.

So (C) is our best option.
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Can someone please explain the answers to Q7? I got those 3 (Q2 and Q6 too) wrong.
I understand Q2 is a blunder, a huge mistake that I did hurrying up myself.
Q6 - Well, I was hung between Option B and C. I went with B as it sounded like a conclusion, an inference that the author "asserts". But there's no mention of free AND fair trade. So, it is wrong.

Q7 - It would be really helpful if someone explains it to me why A is wrong here. TIA.
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Apologies yeah it is para 2. I missed the context.
For D it says Fair trade economies dominated the market but this is not entirely true . It says Arboria dominated once but. Arboria's trade policy seems paralyzed by the relentless conflict between proponents of “free” and “fair” trade.
Can you help me find the exact line you are referring ?
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All correct in 11 mins 30 seconds, including almost 4 mins to read.

Para 1- Arboria's trade policy- continuing economic loss
Para 2- obsolete trade policy
Para 3- paralyzed by the relentless conflict between free and fare traders, 2 outdated premises
Para 4- Issues with the two outdated assumptions

494.  Which of the following best states the difference between free trade and fair trade, as explained in the passage?
B. Free trade is based on the unrestricted movement of goods across all national boundaries, whereas fair trade is based on a nation's restriction of commerce with each nation that erects trade barriers to the first nation's exports.

The free traders argue that Arborian markets should be open, and the movement of goods and services across national borders unrestrained. The fair traders assert that access to Arborian markets should be restricted until Arborian businesses are granted equal access to foreign markets.

495.  It can be inferred that the author of the passage would most likely agree with which of the following statements about multilateral trade negotiations?
D. Arborian reliance on multilateral trade negotiations, while appropriate in the past, is inadequate for today's global marketplace.

But both sides base their positions on the same two outdated premises:
Forging a multilateral trade policy consensus among so many diverse economic systems has become virtually impossible.

496.  Which of the following statements best summarizes the author's opinion of “free traders” and “fair traders”?
E. The proponents of both free and fair trade have based their positions on out-of-date premises that do not reflect current economic conditions.

Both are correct: fair trade requires equal access and equal access leads to free trade. But both sides base their positions on the same two outdated premises:

497.  The author mentions all of the following as characteristic of world trade in the mid-1940s EXCEPT:

A. Arboria played a major role in the global marketplace.- incorrect, an artifact of the mid-1940s when Arboria and Whorfland dominated the global economy
B. Whorfland played a major role in the global marketplace.- same as A
C. Tariffs were the main obstacle to trade.- incorrect, tariffs were the principal obstacle to trade
D. Fair-trade economies dominated international trade.- Correct
E. Arborian manufacturers were unsurpassed in most industries.- incorrect, Arborian supremacy was uncontested in virtually all industries

498.  In presenting the argument in the passage, the author uses all of the following EXCEPT:

A. statistical information about global commerce- incorrect, The 40-year-old GATT now covers less than 7 percent of global commerce. World trade is no longer dominated by the free-trade economies; nearly 75 percent is conducted by economic systems operating with principles at odds with those of Arboria.
B. definitions of terms concerning world trade- incorrect, The free traders argue that..
C. generalizations about Arboria's economic system- incorrect, first para
D. historical background of Arborian trade policy - incorrect, Arboria is operating with an obsolete trade policy...
E. an example of an economic system whose principles differ from those of Arboria - Correct

499.  The author asserts which of the following about Arboria's trade policy?
C. Arboria's current trade policy was essentially developed during the 1940s and has changed little since that time. - correct, In the intervening decades, economic circumstances have shifted radically. Arborian trade policy has not.

500.  The passage is primarily concerned with
C. advocating a reassessment of Arboria's trade policy - correct, Arboria's trade policy is an outdated one and is not appropriate for the present market

501.  The author implies that the main obstacle to a truly effective Arborian trade policy is the
B. inability of Arborian leaders to recognize that foreign economic systems are based on principles fundamentally different from their own

The problem is not Arboria's products, but Arboria's trade policy. Arboria faces the prospect of continuing economic loss until Arborian business and political leaders recognize the fundamental differences between Arborian and foreign economic systems. Today the key trade issue is not free trade versus protectionism but diminishing trade versus expanding trade.
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500.  The passage is primarily concerned with

A. illustrating the erosion of Arboria's position in the world marketplace
B. examining the differences between “free” and “fair” traders
C. advocating a reassessment of Arboria's trade policy
D. criticizing the terms of the General Agreement on Tariffs and Trade (GATT)
E. comparing the different economic circumstances of Arboria's trade partners

Can someone tell me why C is the correct answer? In the passage, the author talks about Arboria`s struggle in the global marketplace, then he talks about the problem, conflict between proponents of free and fair trade and how both of them are wrong. So where in the passage is the author advocating a reassessment? Isnt he just talking about the problems?
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GMATNinja
How to decide between D and E?

Hi Skywalker18 and GMATNinja
As for Question "It can be inferred that the author of the passage would most likely agree with which of the following statements about multilateral trade negotiations" I had intended to choose (D) but then changed my mind as the phrase "while approriate in the past" put me off. I just couldn't find any particular detail in the passage which shows how "approriate" Arborian reliance on multilateral trade negotiations is.

Could you help me with this concern?
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