China as a nation faces two major financial problems. First, eighty

Question

China as a nation faces two major financial problems. First, eighty-four percent of state-owned enterprises do not generate profit. Government failed to collect money from such business. Rather, it has to appropriate substantial funds to these enterprises in order to prevent them from going bankrupt and thus resulting in high unemployment rate. Second, 203 million of civilians in countryside will not be able to gain pension after they retire due to the limited budget of government.

I would like to make an outrageous suggestion that would at one stroke generate finance earnings and provide funds for civilians’ retirement. I would propose that government sells its holdings in state-owned enterprises on the open market. Such sales would provide substantial funds for village civilian’s pension. At the same, they could cut down financial burden on these state-owned enterprises.

You might object that government would be deprived of the opportunity to share its enterprise’s profit if someday they make money. I agree. Sell holdings of enterprises that would never generate profit. But, you might reply, every enterprise that competes on the market has potential. Here we part company. Theoretically, you may be correct in claiming that every enterprise has the potential to make money. Practically, you are wrong.

I refer to the thousands of state-owned enterprises that are not likely to make money. These companies are 100 percent held by the nation as a whole. Government officials are appointed as the chairman, CEO and president. The management was not responsible for the public interest, but for the nation as a whole. If there is no significant loss in business, they will soon be promoted back to the higher level position in government. If their companies perform great, these executives receive direct money compensation. However, their salary, when combined with such compensation, will be far below that of their counterpart in private company.

It would be unrealistic to suggest that village civilians would have sufficient funds if government’s shares were sold on the open market. But the demand for compensating the state-own enterprises would be substantially reduced.    1 
 1. According to the passage, executives in a state-owned enterprise are motivated by

(A) direct money compensation
(B) increasing salary
(C) political outlook
(D) share option
(E) social responsibility

2 
 2. The primary purpose of the passage is to propose

(A) an alternative to manage government property
(B) a way to relieve government burden while providing funds to village civilians
(C) a way to distinguish state-owned enterprises that make money from those that do no make money
(D) the governmental approach to evaluate state-owned enterprise’ executives
(E) a new system for national pension system

3 
 3. The author implies that all of the following statements about enterprises with which government holds 100 percent share are true EXCEPT :

(A) A market for government’s share already exists.
(B) Such enterprises seldom generate profit.
(C) There is likely to be a continuing loss of such enterprises.
(D) Government officers are appointed as the executives with such enterprises.
(E) If the executives perform poorly, they will be demoted to lower position.

4 
 4. The author implies that which of the following would occur if government’s shares were sold on the open market?

I. The shortage of retirement fund in village would eventually cease completely.
II. Current executives in state-owned enterprises are not motivated to perform better
III. Civilians in countryside would be able to seek sufficient funds from government.

(A) I only
(B) II only
(C) I and II only
(D) II and III only
(E) I, II, and III

5 
 5. The author anticipates which of the following initial objections to the adoption of his proposal?

(A) Government will not be able to sell its holdings with state-owned enterprise.
(B) The ability of government’s to control the national economy will be weakened if state-owned enterprises are sold to private owners.
(C) It is impossible to find enterprises that will never generate profit.
(D) The poor performance of state-owned enterprises will continue.
(E) The countryside civilians are sill unable to seek financial support from government.

RC Butler 2022  -  Practice Two RC Passages Everyday.   
Passage # 87 Date: 01-Mar-2022
 This question is a part of RC Butler 2022 .  Click here for Details

Source: GMAT CAT GMAT Verbal Study Guide

ksumanth · Answer

could u explain 5th question? why option C?

Sajjad1994 · Answer

Welcome to GMAT Club!

Official Explanation

5. The author anticipates which of the following initial objections to the adoption of his proposal?

Difficulty Level:   Hard

Explanation

In the  third paragraph , the author illustrates a possible objection to his proposal. The opposite views are  “government would be deprived of the opportunity to share its enterprise’s profit if someday they make money”  and  “every enterprise that competes on the market has potential” . Choice C presents one of them, and is the correct answer.

Answer: C

hientranzx · Answer

1. According to the passage, executives in a state-owned enterprise are motivated by

(A) direct money compensation
(B) increasing salary
(C) political outlook
If there is no significant loss in business, they will soon be promoted back to the higher level position in government

2. The primary purpose of the passage is to propose

(A) an alternative to manage government property
(B) a way to relieve government burden while providing funds to village civilians
I would propose that government sells its holdings in state-owned enterprises on the open market. Such sales would provide substantial funds for village civilian’s pension. At the same, they could cut down financial burden on these state-owned enterprises.

(C) a way to distinguish state-owned enterprises that make money from those that do no make money
(D) the governmental approach to evaluate state-owned enterprise’ executives
(E) a new system for national pension system
(D) share option
(E) social responsibility

3. The author implies that all of the following statements about enterprises with which government holds 100 percent share are true EXCEPT:

(A) A market for government’s share already exists.
(B) Such enterprises seldom generate profit.
(C) There is likely to be a continuing loss of such enterprises.
(D) Government officers are appointed as the executives with such enterprises.
(E) If the executives perform poorly, they will be demoted to lower position.
If there is no significant loss in business, they will soon be promoted back to the higher level position in government. If their companies perform great, these executives receive direct money compensation.

abhishektyga · Answer

OE for Q1 as I marked A as the answer.
It is stated in the passage that "If their companies perform great, these executives receive direct money compensation"

OE for Q4 as I marked D as the answer.

Sajjad1994 · Answer

Official Explanation

1. According to the passage, executives in a state-owned enterprise are motivated by

Difficulty Level:   750

Explanation

The passage mentioned the executives of state-owned enterprises in fourth paragraph; therefore, we need not to consider other paragraphs when referring to the original passage. Since   “…their salary, when combined with such compensation, will be much less than the amount they would earn if were in private company”   as stated in the last sentence, these executives are not motivated by financial earnings. If yes, they will transfer to a private company. Therefore, they are not motivated by direct money compensation, increasing salary, or share option. Rather, they are concerned on their political outlook.   “If there is no significant loss in business, they will soon be promoted back to the higher level position in government.”    Choice C  is the correct answer. For  choice E , the passage never discussed the executives’ social responsibility.

Answer: C

Sajjad1994 · Answer

Official Explanation

4. The author implies that which of the following would occur if government’s shares were sold on the open market?

Difficulty Level:   750

Explanation

This question asks you to identify information that is suggested rather than directly stated in the passage. To answer it, first look for the location in the passage of the information specified in answer choice. The last paragraph states that  “It would be unrealistic to suggest that village civilians would have sufficient funds if government’s shares were sold on the open market” , therefore, I is incorrect. III, which is a repeated of I, is also incorrect. Only II can be inferred from the original passage, therefore B is the best answer.

Answer: B

VerbalBot · Answer

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China as a nation faces two major financial problems. First, eighty

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China as a nation faces two major financial problems. First, eighty

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