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Large national budget deficits do not cause large trade deficits. If t

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Re: Large national budget deficits do not cause large trade deficits. If t  [#permalink]

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New post 24 Aug 2017, 15:16
rishabhmishra wrote:
sir can you please help me to understand the argument

According to the author, "large national budget deficits do not cause large trade deficits." The rest of the passage supports this claim:

  • If large national budget deficits DID cause large trade deficits, then "countries with the largest budget deficits would also have the largest trade deficits."
  • However, when countries are reliably compared (by adjusting deficit figures), "there is no such correlation."

Thus, the evidence suggests that TRADE deficits do not necessary go up as BUDGET deficits go up. This, in turn, suggests that trade deficits would not necessarily go DOWN as BUDGET deficits go down. So we need an answer choice that fits with these inferences.

See if that helps!
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Re: Large national budget deficits do not cause large trade deficits. If t  [#permalink]

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New post 03 Apr 2018, 03:12
Large national budget deficits do not cause large trade deficits. If they did, countries with the largest budget deficits would also have the largest trade deficits. In fact, when deficit figures are adjusted so that different countries are reliably comparable to each other, there is no such correlation.

If the statements above are all true, which of the following can properly be inferred on the basis of them?

This is an inference question.

There is no co-relation between LNBd and LTD. Any option that tries to show the corelation will be eliminated.

A - Out of scope, because we no nothing about the foreign trade as per the passage.
B - We don't know this if the reliable comparision is possible or not.
C- Yes, as it emphasizes on the point that there is no such co-relation exist.
D - Smaller country - smaller budget - smaller trade deficiet - Co-related. Eliminate.
E - Likewise E is also eliminated.
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Re: Large national budget deficits do not cause large trade deficits. If t  [#permalink]

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New post 04 Apr 2018, 06:47
joyseychow wrote:
Large national budget deficits do not cause large trade deficits. If they did, countries with the largest budget deficits would also have the largest trade deficits. In fact, when deficit figures are adjusted so that different countries are reliably comparable to each other, there is no such correlation.

If the statements above are all true, which of the following can properly be inferred on the basis of them?

(A) Countries with large national budget deficits tend to restrict foreign trade.
(B) Reliable comparisons of the deficit figures of one country with those of another are impossible.
(C) Reducing a country’s national budget deficit will not necessarily result in a lowering of any trade deficit that country may have.
(D) When countries are ordered from largest to smallest in terms of population, the smallest countries generally have the smallest budget and trade deficits.
(E) Countries with the largest trade deficits never have similarly large national budget deficits.


A. Opposite from the premise.
B. Too strong and can't be inferred.
C. Says that there is no correlation between trade and budget deficit.
D. Irrelevant
E. Option goes against the premise by saying that deficits do have not 100% relation, but there can be some relation.

Hence (C)
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Re: Large national budget deficits do not cause large trade deficits. If t  [#permalink]

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New post 31 May 2018, 08:03
If you negate (C) that is "Reducing a country’s national budget deficit will not necessarily result in a lowering of any trade deficit that country may have" CONTRADICTS the first statement "Large national budget deficits do not cause large trade deficits". This results in establishing the "cause and effect relationship". Hence option C is correctly reproducing the claim in question stem that there is not causation between budgets deficits and trade deficits.
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Re: Large national budget deficits do not cause large trade deficits. If t &nbs [#permalink] 31 May 2018, 08:03

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