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Historians remain divided over the role of banks in facilitating eco

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Re: Historians remain divided over the role of banks in facilitating eco [#permalink]

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New post 14 Mar 2018, 23:02
adkikani wrote:
GMATNinja GMATNinjaTwo


Quote:
(Book Question: 422) The passage suggests that the opposition to banks in the South in the early nineteenth century stemmed in part from the perception that banks
A. did not benefit more than a small minority of the people
B. did not support the interests of elite planters
C. were too closely tied to transportation and industrial interests
D. were unwilling to issue the long-term loans required by agrarian interests
E. were too willing to lend credit widely

The passage says:
Unlike the earliest banks (i.e. banks before early nineteenth century),
which had primarily provided short-term loans to
well-connected merchants, the banks of the early
nineteenth century issued credit widely (ie to more customers).


How an option A be correct?

What is issue with B/D?

Even though "the banks of the early nineteenth century issued credit widely," this question refers to the perception of banks in the South.

In the South, banks "were seen as monopolistic institutions controlled by an elite group of planters." So southerners thought that the banks were controlled by a small minority of people ("an elite group planters"). If this perception were accurate, then the banks would likely only benefit that small minority. Thus, in the South, there existed the perception that banks only benefited a small minority of people.

Choice (B) directly contradictions the perception in the South. Also, there is nothing in the passage to support choice (D). (A) is the best answer.

I hope that helps!
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Re: Historians remain divided over the role of banks in facilitating eco [#permalink]

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New post 15 May 2018, 19:20
GMATNinja wrote:
gamerguy0074 wrote:
GMATNinja
Please help in explaining the second and last questions this passage.. Your help is much appreciated

Quote:
(420) The passage suggests that the scholars mentioned in line 4 would argue that the reason banks tended not to fund manufacturing and transportation projects in the late eighteenth and early nineteenth centuries was that

As explained in the last sentence of the first paragraph, financial institutions (such as banks) followed conservative lending practices and shunned projects that were uncertain (i.e. risky) and capital-intensive, such as manufacturing and transportation projects. This implies that banks following conservative lending practices would prefer less risky projects.

So we know that banks tended not to fund manufacturing and transportation projects in the late eighteenth and early nineteenth centuries. Why?... because those banks, which followed conservative lending practices, preferred less risky projects. This reason is summarized in choice (B):
Quote:
(B) [manufacturing and transportation] projects entailed a level of risk that was too great for banks’ conservative lending practices

As for the last question,
Quote:
(423) Which of the following statements best describes the function of the last sentence of the passage?
A. It provides evidence tending to undermine the viewpoint of the scholars mentioned in line 5.
B. It resolves a conflict over the role of banks summarized in the first paragraph.
C. It clarifies some of the reasons state legislatures began granting more bank charters.
D. It qualifies a claim made earlier in the passage about the impact of banks on the American economy in the early nineteenth century.
E. It supports a claim made earlier in the passage about how the expansion of credit affected the economy.

The purpose of the second paragraph is to explain the historians' belief (or "claim") that banks were crucial in transforming the early national economy. Does this claim have any stated limitations? Yes--as explained in the last sentence of the passage, those same historians argued that, in the South, there was an exception to this general trend. So the last sentence modifies and limits ("qualifies") the historians' claim that banks were crucial in transforming the early national economy, and the answer is (D).

I hope this helps!
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Historians remain divided over the role of banks in facilitating eco [#permalink]

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New post 15 May 2018, 19:21
For the question 420.. Why can't we take option D as correct? The passage does talk about how these projects would not support economic growth? 'These banks played a minor role.....'

Cant we inter link these two statements?
Historians remain divided over the role of banks in facilitating eco   [#permalink] 15 May 2018, 19:21

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