Bunuel wrote:
Economist: In 2015, the average per-person amount paid for goods and services purchased by consumers in Country X was the equivalent of $17,570 in United States dollars, just 30 percent of the corresponding figure of $58,566 for Country Y. Yet in 2015, there was already a substantial middle class in Country X that had discretionary income for middle-class consumer goods such as new vehicles, computers, or major household appliances, while a significant portion of the middle class in Country Y did not have sufficient income to purchase such items.
Which of the following, if true, most helps explain the discrepancy in the relationships described by the economist?
A. There are many consumer goods, such as household appliances, that are produced in Country X to be sold in the Country Y market.
B. The volume of trade between Country X and Country Y is increasing rapidly in both directions.
C. The economy of Country Y is recovering from a downturn that affected both Country Y and Country X.
D. Country X residents pay much less than their Country Y counterparts for housing, transportation, and child care.
E. In Country Y as well as in Country X, there are few assembly-line jobs in factories that pay a middle-class wage.
CR33061.01
OG2020 NEW QUESTION
Country X per person amount spent for goods and services was 17k. For country Y, this figure was 58k. (looks like country X is a poor country and country Y is a rich country)
Country X middle class had income for consumer goods. Country Y middle class did not have sufficient funds. (then this is unexpected)
What can explain this? We can explain it in many ways.
1. The 17k and 58k figures are amount spent per person in the country. The demographic could be different such as equitable distribution of wealth in X but widely varying in country Y (so that very rich spend a lot increasing the national average)
2. Country X middle class earning the same as country Y middle class but leading a very frugal life.
3. Cost of living in country Y could be very high leading to no money left for discretionary spending.
Let's look at the options:
A. There are many consumer goods, such as household appliances, that are produced in Country X to be sold in the Country Y market.
From where the consumer goods come is irrelevant. It is too much of a stretch of imagination to think that country Y will charge very high import duties and hence the cost of these goods will be very high and hence country Y people will not have enough money for them. Besides, country Y middle class has no money for all such consumer goods. Not all goods come from country X.
B. The volume of trade between Country X and Country Y is increasing rapidly in both directions.
Irrelevant. We need something that distinguishes X from Y.
C. The economy of Country Y is recovering from a downturn that affected both Country Y and Country X.
Irrelevant. We need something that distinguishes X from Y.
D. Country X residents pay much less than their Country Y counterparts for housing, transportation, and child care.
This makes sense. It is our cost of living logic. If housing, transportation, and child care costs are much lower in country X, they will have money leftover.
E. In Country Y as well as in Country X, there are few assembly-line jobs in factories that pay a middle-class wage.
Irrelevant. We need something that distinguishes X from Y.
Answer (D)
close
26 Apr 2019, 03:54
12%
(02:19)
wrong 
