Following discussions between the U.S. and Great Britain after World W

Question

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Passage # 42, Date: 21-Apr-2020
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Following discussions between the U.S. and Great Britain after World War II, the General Agreement on Tariffs and Trade (GATT) was founded at the dawn of American postwar economic dominance. The U.S. agreed to reduce its traditionally high tariffs if Britain would relax its trading preference for countries within the Commonwealth. The two countries agreed to include other countries under the GATT charter. The GATT stipulated that members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one. The U.S. generally took the lead in GATT talks held every few years by offering generous trade concessions. The growth in world trade and living standards during the first postwar decades seemed to confirm that the system worked. But problems surfaced in the 1960s as foreign-made textiles began to flood U.S. markets. Tensions increased in the 1970s as Japan and other nations expanded their sales of electronic consumer goods to U.S. buyers.

Today, because the U.S. no longer holds the dominant economic position it did in 1950, its ability to use new GATT negotiations to generate trade growth is limited. But a more fundamental problem is that many countries do not subscribe to U.S. notions of free trade. What happens when one country promotes cartels and another breaks them up, or when one government practices bureaucratic intervention and industrial targeting while another refrains? Such differences underlie present difficulties. Firms from countries with less open economies will penetrate more open markets but the reverse will not occur. Although this will be "fair" under the GATT system, countries with more open economies will resist it, and rising frictions will occur.

In effect, core GATT principles discriminate against societies with open economies. While this has always been true, the problem was initially hidden by U.S. economic dominance and by the greater like-mindedness among a relatively small number of GATT members. As GATT membership has grown and U.S. dominance has waned, this flaw has been a primary source of growing tensions.    1 
 1. The primary purpose of this passage is to

a) describe the positive and negative effects of American control of the postwar global economy
b) explain that GATT was beneficial to the United States economy before the 1960s
c) argue that GATT principles are responsible for economic disharmony among its member nations
d) demonstrate a link between GATT and recent economic growth in several Commonwealth nations
e) question the view that American economic policies have helped the postwar economies of other nations

2 
 2. The author suggests that GATT's fundamental principles

a) will undermine efforts to recruit new members to the agreement
b) have always promoted the economic growth of the United States
c) are too rigid to encourage reforms in the economies of member nations
d) should be reformulated to assist nations with less open economies
e) give some nations an economic advantage over other nations

3 
 3. The passage implies which of the following about countries with less open economies?

a) They have tried to change the terms of GATT to favor themselves.
b) They have suffered as a result of intense competition from abroad.
c) They have single-handedly brought about the end of U.S. economic dominance.
d) They have used the terms of GATT to their own advantage.
e) They have permitted foreign corporations to flood their domestic market.

4 
 4. According to the passage, which of the following statements is consistent with a basic principle of GATT?

a) Nations should raise tariffs in order to protect their domestic industries against foreign competition.
b) Other nations should follow international economic policies determined by the United States.
c) A trade concession granted to one member nation must be granted to every member nation.
d) International trade negotiations should take place every year in order to solve global economic problems.
e) Member nations may give preferential treatment to foreign industries in order to spur imports.

varun325 · Answer

1. The primary purpose of this passage is to

a) describe the positive and negative effects of American control of the postwar global economy ( Close But I prefer C)
b) explain that GATT was beneficial to the United States economy before the 1960s ( This is just a small part)

c) argue that GATT principles are responsible for economic disharmony among its member nations ( Correct)
Refer " Firms from countries with less open economies will penetrate more open markets but the reverse will not occur. Although this will be "fair" under the GATT system, countries with more open economies will resist it, and rising frictions will occur."

d) demonstrate a link between GATT and  recent economic growth in several Commonwealth nations . This is not explained
e) question the view that American economic policies have helped the postwar economies of other nations. Author doesn't seems to questions

2. The author suggests that GATT's fundamental principles

a) will undermine efforts to recruit new members to the agreement. Members are expanding 
b) have always promoted the economic growth of the United States .Not mentioned
c)  are too rigid  to encourage reforms in the economies of member nations . Rigid is not anywhere

d) should be reformulated to assist nations with less open economies ( Out of context)

e) give some nations an economic advantage over other nations ( Correct) "Members with less open economies have taken the advantage of the principles"

3. The passage implies which of the following about countries with less open economies?

a) They have tried to change the terms of GATT to favor themselves.( Not mentioned)
b) They have suffered as a result of intense competition from abroad.( Opposite)
c) They have single-handedly brought about the end of U.S. economic dominance.( Out of context)
 d) They have used the terms of GATT to their own advantage.( Correct) 
e) They have permitted foreign corporations to flood their domestic market.( Opposite)

4. According to the passage, which of the following statements is consistent with a basic principle of GATT?

a) Nations should raise tariffs in order to protect their domestic industries against foreign competition.( opposite)
b) Other nations should follow international economic policies determined by the United States. ( Not Correct) Principle were laid

c) A trade concession granted to one member nation must be granted to every member nation.( Correct)
Refer"The GATT stipulated that members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one"
 
d) International trade negotiations should take place every year in order to solve global economic problems.( not mentioned anything about yearly negotiations)
e) Member nations may give preferential treatment to foreign industries in order to spur imports.( Members should give equivalent benefits to other member nations not preferential)

ksht · Answer

1. The primary purpose of this passage is to
 a) describe the positive and negative effects of American control of the postwar global economy  - America no longer control the terms of GATT
 b) explain that GATT was beneficial to the United States economy before the 1960s  - was confused b/w b and c. But this was mentioned in para 1 only, para 2 and 3 discusses how in general open economies are at disadvantage
 c) argue that GATT principles are responsible for economic disharmony among its member nations  - para 3 first line - 'In effect, core GATT principles discriminate against societies with open economies.'
 d) demonstrate a link between GATT and recent economic growth in several Commonwealth nations  - no such link is covered
 e) question the view that American economic policies have helped the postwar economies of other nations  - other economies is not the focus of passage

2. The author suggests that GATT's fundamental principles
 a) will undermine efforts to recruit new members to the agreement  - not mentioned
 b) have always promoted the economic growth of the United States  - beneficial in the beginning only
 c) are too rigid to encourage reforms in the economies of member nations  - nowhere mentioned the rigidness of GATT
 d) should be reformulated to assist nations with less open economies  - Although para 2 mentions US inability to use new GATT negotiations but passage doesn't focus on this and option e seems like a better choice
 e) give some nations an economic advantage over other nations  - para 3 first line - 'In effect, core GATT principles discriminate against societies with open economies.'

3. The passage implies which of the following about countries with less open economies?
 a) They have tried to change the terms of GATT to favor themselves.  - they haven't tried to change any terms
 b) They have suffered as a result of intense competition from abroad.  - contrary to passage
 c) They have single-handedly brought about the end of U.S. economic dominance.  - although effected US economies but nowhere mentioned single-handedly
 d) They have used the terms of GATT to their own advantage. 
 e) They have permitted foreign corporations to flood their domestic market.  - contrary to passage

4. According to the passage, which of the following statements is consistent with a basic principle of GATT?
 a) Nations should raise tariffs in order to protect their domestic industries against foreign competition.  - out of scope
 b) Other nations should follow international economic policies determined by the United States . - no such mention
 c) A trade concession granted to one member nation must be granted to every member nation.  - para 1 mentions - 'The GATT stipulated that members must treat foreign participants in their economies the same as domestic firms'
 d) International trade negotiations should take place every year in order to solve global economic problems.  - GATT is not about solving global economic problems
 e) Member nations may give preferential treatment to foreign industries in order to spur imports.  - no mention

bM22 · Answer

1. The primary purpose of this passage is to

a) describe the positive and negative effects of American control of the postwar global economy
b) explain that GATT was beneficial to the United States economy before the 1960s
 c) argue that GATT principles are responsible for economic disharmony among its member nations
 d) demonstrate a link between GATT and recent economic growth in several Commonwealth nations
e) question the view that American economic policies have helped the postwar economies of other nations

Correct Answer - C
 Explanation - The para discusses what is GATT, how did it come into effect and the positive effect it had on the global economy before the 1960's. Starting from the end of 1st para and in complete 2nd and 3rd para, author discusses the negative effects of GATT after 1950's and what it led to. So option C seems most appropriate to be the purpose of the passage.
Option A - incorrect, as we cannot actually say that GATT was a form of US government control.
Option B - incorrect as its not the complete jist of the passage and insufficient to be the primary purpose of the passage.
Option D - incorrect, only partly the purpose.
Option E - incorrect, as this view is also later on changed, and the passage then discusses the negative effects GATT has on other economies.

2. The author suggests that GATT's fundamental principles

a) will undermine efforts to recruit new members to the agreement
b) have always promoted the economic growth of the United States
c) are too rigid to encourage reforms in the economies of member nations
d) should be reformulated to assist nations with less open economies
 e) give some nations an economic advantage over other nations

Correct Answer - E
 Explanation - as mentioned in the passage : "Firms from countries with less open economies will penetrate more open markets but the reverse will not occur. Although this will be "fair" under the GATT system,".
So the GATT is bound to benefit some nations over the others.
Option A: incorrect, not entirely correct, since new members with less open economies can always be added.
Option B: incorrect, mostly it has but after 1960's it mostly did not benefit the US economies.
Option C: incorrect, not discussed in the passage.
Option D: incorrect, as its already beneficial for the less open economies, so wrong statement.

3. The passage implies which of the following about countries with less open economies?

a) They have tried to change the terms of GATT to favor themselves.
b) They have suffered as a result of intense competition from abroad.
c) They have single-handedly brought about the end of U.S. economic dominance.
 d) They have used the terms of GATT to their own advantage.
 e) They have permitted foreign corporations to flood their domestic market.

Correct Answer - D
 Explanation - as mentioned in the passage: "But a more fundamental problem is that many countries do not subscribe to U.S. notions of free trade. What happens when one country promotes cartels and another breaks them up, or when one government practices bureaucratic intervention and industrial targeting while another refrains? Such differences underlie present difficulties. Firms from countries with less open economies will penetrate more open markets but the reverse will not occur. Although this will be "fair" under the GATT system, countries with more open economies will resist it, and rising frictions will occur.". Its clearly visible that firms with less open economies are using GATT to their advantage.
Option A: incorrect, as they dont need to try, its already in their favor.
Option B: incorrect, its the open economies that have suffered.
Option C: incorrect, not discussed in the passage.
Option E: incorrect, not discussed in the passage.

4. According to the passage, which of the following statements is consistent with a basic principle of GATT?

a) Nations should raise tariffs in order to protect their domestic industries against foreign competition.
b) Other nations should follow international economic policies determined by the United States.
 c) A trade concession granted to one member nation must be granted to every member nation.
 d) International trade negotiations should take place every year in order to solve global economic problems.
e) Member nations may give preferential treatment to foreign industries in order to spur imports.

Correct Answer - C
 Explanation - as mentioned in the passage:"the General Agreement on Tariffs and Trade (GATT) was founded at the dawn of American postwar economic dominance. The U.S. agreed to reduce its traditionally high tariffs if Britain would relax its trading preference for countries within the Commonwealth. The two countries agreed to include other countries under the GATT charter. The GATT stipulated that members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one. "
Option A,B,D,: incorrect, as not mentioned in the passage.
Option E: incorrect for the same reasons for which C is correct. As mentioned in the above explanation, memeber nations are not to give any preferential treatment to foreign industries in order to spur imports.

AnirudhaS · Answer

Answers are in  bold .

1. The primary purpose of this passage is to
 a) describe the positive and negative effects of American control of the postwar global economy 
b) explain that GATT was beneficial to the United States economy before the 1960s
c) argue that GATT principles are responsible for economic disharmony among its member nations
d) demonstrate a link between GATT and recent economic growth in several Commonwealth nations
e) question the view that American economic policies have helped the postwar economies of other nations

Explanation of question 1 
Basically just by looking at the passage the term GATT occurs multiple times, so the primary purpose might have the word GATT in it as well. But we need to be cautious. Lets go through the choices
A - Yes it talks about the positive and negative effects of US control. This looks kind of fitting. Lets hold on to this choice.
B - The passage talks about post war economy both before and aftert 1960s, so this cannot be the main idea.
C - Well it might be, but is that the main purpose of the passage, no.
D - Distortion of the meaning. Commonwealth is mentioned but not in this context. Out of scope.
E - It has definitely helped SOME nations. But has it helped ALL other nations? No, as it is clearly mentioned that GATT principles discriminate against societies with open economies.
A is the answer (without having the word GATT in it!!)
_________________________________________________________________________________________________________________________________

2. The author suggests that GATT's fundamental principles
a) will undermine efforts to recruit new members to the agreement
b) have always promoted the economic growth of the United States
c) are too rigid to encourage reforms in the economies of member nations
d) should be reformulated to assist nations with less open economies
 e) give some nations an economic advantage over other nations

Explanation of question 2 
A - Out of scope, not mentioned
B - ALWAYS is too strong. Out.
C - The rigidity of the fundamental principles of GATT is not discussed.
D - But why? Think about this for a second, why would you want to assist nation which is already winning (less open economy country will penetrate other markets like US, but the US cannot penetrate these countries's markets). If anything principles should be reformulated so that this does not happen.
E - This is pretty much stated here -  "In effect, core GATT principles  discriminate against societies  with open economies."

_________________________________________________________________________________________________________________________________

3. The passage implies which of the following about countries with less open economies?
a) They have tried to change the terms of GATT to favor themselves.
b) They have suffered as a result of intense competition from abroad.
c) They have single-handedly brought about the end of U.S. economic dominance.
 d) They have used the terms of GATT to their own advantage. 
e) They have permitted foreign corporations to flood their domestic market.

Explanation of question 3 
A - No, they are just using the system to their advantage
B - Out of scope
C - Hell no!!
D - Exactly the author's point. They are playing by the rules, but using it to their advantage - penetrating other markets, whereas the vice versa does not happen.
E - No, and also foreign corporations are not discussed 
_________________________________________________________________________________________________________________________________

4. According to the passage, which of the following statements is consistent with a basic principle of GATT?
a) Nations should raise tariffs in order to protect their domestic industries against foreign competition.
b) Other nations should follow international economic policies determined by the United States.
 c) A trade concession granted to one member nation must be granted to every member nation. 
d) International trade negotiations should take place every year in order to solve global economic problems.
e) Member nations may give preferential treatment to foreign industries in order to spur imports.

Explanation of question 4 
A - This is not implied for the passage.
B - Only if they willing choose to do so, then only they must abide by GATT. Otherwise not.
C - Yes and it is also pretty much stated here -  "The GATT stipulated that members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one." 
D - Not mentioned.
E - This is not implied.

kris19 · Answer

1. The primary purpose of this passage is to
 passage analysis: first para talks about the GATT principles and what happened after 1960s in US with respect to foreign goods. Second para talks about the flaws inherent in GATT and how some countries can use them to their advantage. Third para talks about tensions among nations because of these inherent flaws.

a) describe the positive and negative effects of American control of the postwar global economy
 not correct: passage doesn't say that America controlled global economy. America came up with the free trade idea and as the member nations increased, the core principle of GATT created tensions among member nations

b) explain that GATT was beneficial to the United States economy before the 1960s
 not correct: passage doesn't say that GATT was beneficial to US economy before 1960s, it is just American economy's dominance it couldn't see the issues talked in second para

c) argue that GATT principles are responsible for economic disharmony among its member nations
  correct: GATT was started initially with two nations, but as member nations increased, core GATT principles brought tensions because of the way different countries operate or involve in the trade

d) demonstrate a link between GATT and recent economic growth in several Commonwealth nations
 not correct: there is no mention of economic growth in several Commonwealth nations

e) question the view that American economic policies have helped the postwar economies of other nations
 not correct: passage talks about free trade not about American economic policies, and even if free trade is one of the economic policies there is no mention of the connection between this policy and economic growth of other nations 
_________________________________________________________________________________________
2. The author suggests that GATT's fundamental principles

a) will undermine efforts to recruit new members to the agreement
 not correct: no criteria was mentioned in the passage to recruit new members

b) have always promoted the economic growth of the United States
 not correct: opposite - 'problems surfaced in the 1960s as foreign-made textiles began to flood U.S. markets. Tensions increased in the 1970s as Japan and other nations expanded their sales of electronic consumer goods to U.S. buyers'

c) are too rigid to encourage reforms in the economies of member nations
 not correct: no discussion of GATT bringing reforms in the economies of member nations. Passage just talks about its core principles, and how these principles brought tensions as member nations increased in GATT

d) should be reformulated to assist nations with less open economies
 not correct: author doesn't propose any changes to GATT principles so that they will be helpful to less open economies. He just highlights the current situation regarding GATT principles

e) give some nations an economic advantage over other nations
  correct: passage says 'Firms from countries with less open economies will penetrate more open markets but the reverse will not occur, and this approach is "fair" under the GATT system ' 
__________________________________________________________________
3. The passage implies which of the following about countries with less open economies?

a) They have tried to change the terms of GATT to favor themselves.
 not correct: no mention of changing the terms of GATT

b) They have suffered as a result of intense competition from abroad.
 not correct: no discussion of economic situation in less open economies

c) They have single-handedly brought about the end of U.S. economic dominance.
 not correct: no discussion of why there was an end to the U.S. economic dominance

d) They have used the terms of GATT to their own advantage.
  correct: passage says 'Firms from countries with less open economies will penetrate more open markets but the reverse will not occur. Although this will be "fair" under the GATT system, countries with more open economies will resist it, and rising frictions will occur.' and an example of this situation is 'Tensions increased in the 1970s as Japan and other nations expanded their sales of electronic consumer goods to U.S. buyers.'

e) They have permitted foreign corporations to flood their domestic market.
 not correct: opposite - 'Firms from countries with less open economies will penetrate more open markets but the reverse will not occur' 
________________________________________________________________________________________________
4. According to the passage, which of the following statements is consistent with a basic principle of GATT?

a) Nations should raise tariffs in order to protect their domestic industries against foreign competition.
 not correct: GATT principles - 'members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one'

b) Other nations should follow international economic policies determined by the United States.
 not correct: basic principle of GATT is same rule for every member country

c) A trade concession granted to one member nation must be granted to every member nation.
  correct: members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one

d) International trade negotiations should take place every year in order to solve global economic problems.
 not correct: no connection between GATT and solving global economic problems

e) Member nations may give preferential treatment to foreign industries in order to spur imports.
 not correct: opposite - 'that members would extend to all trading partners concessions awarded to one'

GDT · Answer

1. The primary purpose of this passage is to

Following is the gist of the passage :

Para 1 : How GATT formed, what is the main idea behind it + Initially response and later contrast
 Para 2 : US no longer dominant position so as to get negotiations favouring its trade growth + Closed economies benefit over open
 Para 3 : GATT problem- discriminatory principles from very beginning though felt when US no longer dominant

Thus, passage is concerned with why GATT could not maintain its initial response

a) describe the positive and negative effects of American control of the postwar global economy  Incorrect. Not the primary purpose of the passage 
b) explain that GATT was beneficial to the United States economy before the 1960s  Incorrect. Though the passage does talk about this, the main idea to be communicated is why GATT is no longer effective 
c) argue that GATT principles are responsible for economic disharmony among its member nations   Correct  
d) demonstrate a link between GATT and recent economic growth in several Commonwealth nations  Incorrect. Not the main purpose 
e) question the view that American economic policies have helped the postwar economies of other nations  Incorrect. Not questioning whose policies helped, those of US or GATT

2. The author suggests that GATT's fundamental principles

a) will undermine efforts to recruit new members to the agreement  Incorrect. Can't be inferred 
b) have always promoted the economic growth of the United States  Incorrect. Not currently 
c) are too rigid to encourage reforms in the economies of member nations  Incorrect.. Their is no hint to infer that reform of other nations' economies is needed 
d) should be reformulated to assist nations with less open economies  Incorrect. Author doesn't say that they should be reformulated 
e) give some nations an economic advantage over other nations   Correct

3. The passage implies which of the following about countries with less open economies?

a) They have tried to change the terms of GATT to favor themselves.  Incorrect. No change 
b) They have suffered as a result of intense competition from abroad.  Incorrect. Can't be inferred 
c) They have  single-handedly  brought about the end of U.S. economic dominance.  Incorrect. Can't be inferred 
d) They have used the terms of GATT to their own advantage.   Correct  
e) They have permitted foreign corporations to flood their domestic market.  Incorrect. As mentioned in highlighted part of quote

4. According to the passage, which of the following statements is consistent with a basic principle of GATT?

This can be inferred from the following excerpt :
  "GATT stipulated that members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one. "
 a) Nations should raise tariffs in order to protect their domestic industries against foreign competition.  Incorrect 
b) Other nations should follow international economic policies determined by the United States.  Incorrect. Not mentioned 
c) A trade concession granted to one member nation must be granted to every member nation.   Correct  
d) International trade negotiations should take place every year in order to solve global economic problems.  Incorrect. every year 
e) Member nations may give preferential treatment to foreign industries in order to spur imports.  Incorrect

Gowtham91 · Answer

Q1.
Para1 introduces GATT and USA's genorosity before 1960 and inroduces about the problems arised starting from 1970. 
Para2 discusses about working of GATT and that there are problems inherent in its principles. Also discusses open economies Vs less open economies. 
Para3 concludes by reasons for growing tensions among the countries.

A. From the above paragraph summary, we can see that passage revolves around the principles of GATT and about America's influence on economy post WW-II
B. GATT was beneficial to US even after 1960, since it is open economy.
 C. Correct.  This is mentioned in para1, and para3 concludes it. "In effect, core GATT principles discriminate against societies with open economies." and "As GATT membership has grown and U.S. dominance has waned, this flaw has been a primary source of growing tensions."
D. This can be inferred from the passage. But this is not the primary purpose of the passage. 
E. This is not true in the first place. Hence can't be the primary function of the passage.

Q2.
A. This is not true. Contrary info is presented in para1. "The two countries agreed to include other countries under the GATT charter."
B. This is true for all countries under GATT, not necessarily only US. 
C. This is not mentioned in the passage. 
D. Same as C.
 E. Correct  The advantage is for open economies over less open economies. This is concluded in last para. "In effect, core GATT principles discriminate against societies with open economies"

Q3.
From last sentence of para2, we can infer  OptionD . "Firms from countries with less open economies will penetrate more open markets but the reverse will not occur. Although this will be "fair" under the GATT system, countries with more open economies will resist it, and rising frictions will occur."

Q4.  Option C

sentence 3 of para1 dicusses this point. "The GATT stipulated that members must treat foreign participants in their economies the same as domestic firms, and that members would extend to all trading partners concessions awarded to one. "

Sajjad1994 · Answer

OAs of this RC are as follow:

1. C
2. E
3. D
4. C

Congrats to all those got 4/4, i liked the explanation by  kris19  though. Good luck for the next RCs.

Regards

VerbalBot · Answer

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Following discussions between the U.S. and Great Britain after World W

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