1. The author's main point is that
a) although trade deficits entail current account deficits, the countervailing capital account surplus creates substantial economic benefits
b) every nation should aim to incur large trade deficits because, contrary to common opinion, these deficits actually improve the economy
c) the strength of a nation's economy depends on the size of its trade deficits with other nations whose high subsidies create inflated prices for their consumers
d)
the claim that a trade deficit creates an unhealthy economy relies on two common misconceptions about a trade deficit's effects on jobs and a nation's wealth This clearly is the best answer choice as this para-phases the overall structure of the passage
e) because global economic systems are so complex, misconceptions about employment rate, a nation's wealth, and especially trade deficits are common
2. Which of the following, if true, would strengthen the author's conclusion that greater assets mean higher productivity?
a) The assets that a country builds up when the economy is healthy are likely to be invested abroad.
b) The more assets a country has, the more its citizens can save to purchase homes.
c) Each current account surplus is offset by an equal capital account deficit, and vice versa.
d) When assets flow into a capital account, they are owned by private enterprise.
e)
A country's assets are typically invested in domestic businesses Having greater assets means that the country has more money to invest in business, which in turn raises productivity. The last line from the passage clearly validates the option.
3. The misunderstanding addressed in the second sentence of paragraph 2 is most similar to which one of the following situations?
The first misconception is the generalization of the outcome of a certain event as the outcome of the entire process.Only A does that.a) Investors in a company sell its stock when sales of a certain product dip, even though the company's quarterly profits rose.
b) A babysitter decides to work for a family with three children instead of a family with two children, even though the pay is same.
c) A movie-goer avoids seeing a film that received only one poor review, although it was from a prominent critic, and instead sees a film that got many bad reviews.
d) To ensure the kitchen will be able to handle orders, a restaurant decreases the prices of its appetizers after it began serving food to guests sitting at the bar.
e) In spite of a construction company's new policy of shorter breaks for its workers, productivity drops.
4. According to the passage, which of the following is true of trade deficits?
a) Trade deficits are exclusive to the United States and other developed countries.
b) Trade deficits occur when a country has a capital account surplus and a current account deficit.c) Trade deficits can lead to budget deficits.
d) Countries should work to prevent trade deficits.
e) Political analysts and economists are in agreement about the consequences of a trade deficit.
The third passage states that : capital account surplus<-->a current account deficit<-->more business investment capital .. Hence trade deficit actually doesn't drain the economyashutoshb225