Here's the
official explanation provided by the GMAC for this question:
The sentence tells us that experts agree that the nation of Arboria needs to shift demand away from imports and invest in domestic industrial capacity. Such a change would likely increase exports and result in substituting domestic products for imported products. These predicted outcomes can be expressed using the form
both … and …, which requires parallelism in the phrases conjoined.
Option A: The verbs
should result and
reclaim are not parallel as required by the usage
both … and …. Note: switching the order of both and should with no other change would produce a correct sentence.
Option B: There are two flaws in this answer choice. Because
should immediately precedes
both, the word
both and the word
and must each be followed by a verb form that fits with
should. But
should cannot fit with
domestic markets being reclaimed, so the required parallelism between verb forms is lacking. A second flaw concerns the awkward and jarring separation of the pronoun
that from what it refers to, i.e.,
domestic markets.Option C: This answer choice is flawed in the placement of
both. Its position requires that in this
both … and … construction, the second part of the construction consists of a noun or noun phrase parallel to
increased exports. Instead, we have a verb phrase
reclaim domestic markets, and this does not fit with the preposition
in, which has both parts of the construction within its scope.
Option D: The two parts of the
both … and … construction lack parallelism; the second part would be better (and unambiguous) if
and were immediately followed by
in. A second flaw concerns the awkward and jarring separation of the pronoun
that from what it refers back to, i.e.,
domestic markets.Option E: Correct. Each part of the
both … and … construction consists of a noun phrase, each governed by the preposition
in. The phrase
domestic markets is modified by the phrase
lost to imported goods. The correct answer is E.
Please note that I'm not the author of this explanation. I'm just posting it here since I believe it can help the community.