If there is a disruption in gold mining that results in

Question

If there is a disruption in gold mining that results in higher international gold prices, domestic gold prices in open-market countries such as the United States will rise also, regardless of whether those countries import all or none of their gold.
 
If the statement concerning gold mining disruptions in this passage is true which of the following policies in an open-market nation has the highest probability of insulating that country from the economic impact of a sharp and unexpected increase in international gold prices?
 
Answers:
(A) Decrease domestic gold mining.
(B) Increasing the gold reserve.
(C) Decreasing reliance on gold by increasing financial independence.
(D) Ensuring that the level of gold imported each year is at a constant level.
(E) Refusing to trade with any gold-mining nations that might contribute to such a disruption.

can anyone explain the ans

prasannar · Answer

If there is a disruption in gold mining that results in higher international gold prices, domestic gold prices in open-market countries such as the United States will rise also, regardless of whether those countries import all or none of their gold.

If the statement concerning gold mining disruptions in this passage is true which of the following policies in an open-market nation has the highest probability of insulating that country from the economic impact of a sharp and unexpected increase in international gold prices?

We should look for alternatives dependence on gold alternatives, this is clearly depicted in C

a)Decrease domestic gold mining.-> irrelevant
(B) Increasing the gold reserve.-> does not say how it will impact/insulate the economy
(C) Decreasing reliance on gold by increasing financial independence.-> sounds good
(D) Ensuring that the level of gold imported each year is at a constant level.-> does not insulate
(E) Refusing to trade with any gold-mining nations that might contribute to such a disruption.->does not insulate, eliminate it

khanhquy · Answer

I prefer B to C, C seems out of scope, B supports the domestic market.

prasannar · Answer

Folks,

Any one knows the OA for this question?

Nihit · Answer

C for me . It does seem out of scope but rest choices don't really insulate the economy. 
(B) talks about gold reserves, but the prices of gold are still connected to the international market. Gold reserves : how much and for how long it can resist the price increase in not mentioned.

tarek99 · Answer

i'll go for C as well. The problem with option B is that whether the increase of gold reserve will happen doesn't address whether the gold prices will increase. In general, increase in prices are affected by 2 criteria:

1) increased demand
2) decreased supply

The vise versa is true when talking about the decrease in prices. So according to this problem, in order to control the price increase, we have to find an answer choice that addresses either increase in supply or decrease in demand. In option C, by decreasing reliance on gold, it's pretty much trying to decrease demand for gold, leading to a controlled price if not decreasing it.

bsd_lover · Answer

C for me.
Key for me is what would insulate the country from the ECONOMIC IMPACT of price increase. If the country's economy wasn't dependent on gold then the economic impact will be less severe.

vksunder · Answer

I'd have to go with D. My intial pick was C but I dont think it would insulate the country from economic impact.....

tarek99 · Answer

well when I look at D, it will not change the current price level, which is already considered high. I think D would be correct if we don't have option C. But C gives an indication that the price can decrease, making it stronger than D in my opinion.

iruns0metimes · Answer

My opinion...

A) Decrease domestic gold mining.    
(B) Increasing the gold reserve.    
(C) Decreasing reliance on gold by increasing financial independence.    
(D) Ensuring that the level of gold imported each year is at a constant level.    
(E) Refusing to trade with any gold-mining nations that might contribute to such a disruption.

gmat blows · Answer

I also think it is C. Although, I was tempted with B also. But, with B there are limitations - sooner or later the gold reserve will be depleted, whereas with C, it is a more long term solution.

VerbalBot · Answer

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If there is a disruption in gold mining that results in

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