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Columnist: In these times of fiscal correctness, it is heres

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Columnist: In these times of fiscal correctness, it is heres  [#permalink]

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New post 13 Jul 2014, 22:53
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Columnist: In these times of fiscal correctness, it is heresy to call for expansionary fiscal policy to revive the economy. Yet sound economic principles call for such a prescription, even if it sounds like the wild cry of a slump-struck corporation bothered only about its bottom line.

Which of the following, if true, would most support the author’s views on fiscal policy?

A. In the past, most governments have adopted a conservative attitude in the face of an economic slump.
B. An expansionary fiscal policy would be welcomed by companies that have been overwhelmed by the slump.
C. An expansionary fiscal policy leading to more expenditure would encourage the revival of a depressed economy
D. Sound economic principles suggest that to increase fiscal expenditure during a depression would raise the import bill and adversely affect the trade deficit.
E. Fiscal policy is often used to provoke a reaction in the market.

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Re: Columnist: In these times of fiscal correctness, it is heres  [#permalink]

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New post 14 Jul 2014, 01:17
Ah, Pretty hard question. Took over a min and half to solve.

Here, based on the 1st line of the argument by the Columnist. He/She definitely agree for the expansionary fiscal policy.

A. In the past, most governments have adopted a conservative attitude in the face of an economic slump- It doesn't strengthen the columnist point- So eliminate- Irrelevant

B. An expansionary fiscal policy would be welcomed by companies that have been overwhelmed by the slump- If we carefully look at this statement, mere restatement of the argument.

C. An expansionary fiscal policy leading to more expenditure would encourage the revival of a depressed economy- Provides the exact support needed for the Columnist argument- So hold.

D. Sound economic principles suggest that to increase fiscal expenditure during a depression would raise the import bill and adversely affect the trade deficit.- Actually weakens the columnist conclusion.

E. Fiscal policy is often used to provoke a reaction in the market- Fails to provide support for the expansionary fiscal policy. So eliminate


So the Answer is C. Kudos for the question.
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Re: Columnist: In these times of fiscal correctness, it is heres  [#permalink]

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New post 14 Jul 2014, 01:18
Gnpth wrote:
Ah, Pretty hard question. Took over a min and half to solve.

Here, based on the 1st line of the argument by the Columnist. He/She definitely agree for the expansionary fiscal policy.

A. In the past, most governments have adopted a conservative attitude in the face of an economic slump- It doesn't strengthen the columnist point- So eliminate- Irrelevant

B. An expansionary fiscal policy would be welcomed by companies that have been overwhelmed by the slump- If we carefully look at this statement, mere restatement of the argument.

C. An expansionary fiscal policy leading to more expenditure would encourage the revival of a depressed economy- Provides the exact support needed for the Columnist argument- So hold.

D. Sound economic principles suggest that to increase fiscal expenditure during a depression would raise the import bill and adversely affect the trade deficit.- Actually weakens the columnist conclusion.

E. Fiscal policy is often used to provoke a reaction in the market- Fails to provide support for the expansionary fiscal policy. So eliminate


So the Answer is C. Kudos for the question.


It was a good one that's the reason i shared. Thanks!
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Re: Columnist: In these times of fiscal correctness, it is heres  [#permalink]

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New post 14 Jul 2014, 01:19
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Explanation:

Fiscal correctness means reviving the Economy.

Prime Minister Modi and his Financial Counsel Arun Jaitley are determined for Fiscal Correctness. Heresy means: contradictory to routined, traditional or orthodox thoughts/opinion.


Expansionary Policy is from Macro Economics, which says-

A policy that seeks to expand the money supply to encourage economic growth or combat inflation (price increases). One form of expansionary policy is fiscal policy, which comes in the form of tax cuts, rebates and increased government spending. Expansionary policies can also come from central banks, which focus on increasing the money supply in the economy.

Premise of the question says sound economist or very experienced or matured economics advocate the usage of expansion economics. This i a strengthening question and we have to find a answer that will defend the use of the expansionary economics or fiscal policy.

C explains how will this policy benefit-
An expansionary fiscal policy , leading to more expenditure would encourage production in a depressed economy.. Hence a strengthener.
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Re: Columnist: In these times of fiscal correctness, it is heres  [#permalink]

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New post 27 Dec 2017, 16:12
hello, I cannot find the original source of this question.
The question looks unusual, and I am unsure whether it is a real gmat-like question.
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Re: Columnist: In these times of fiscal correctness, it is heres  [#permalink]

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New post 30 Dec 2018, 22:12
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
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Re: Columnist: In these times of fiscal correctness, it is heres &nbs [#permalink] 30 Dec 2018, 22:12
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