goalsnr wrote:
Neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace. Both are required simultaneously since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country's standard of living.
If the facts stated in the passage above are true, a proper test of a country's ability to be competitive is its ability to
(A) balance its trade while its standard of living rises
(B) balance its trade while its standard of living falls
(C) increase trade deficits while its standard of living rises
(D) decrease trade deficits while its standard of living falls
(E) keep its standard of living constant while trade deficits rise
Please explain your answers
I had little to no idea how standard of living & balanced trade dictate a country's economic competitiveness.
I gathered the information from these two statements in the passage and answered in less than 40 secs.
1st sentence:
Rising standard of living is good.
Balanced trade is good.
But, both should co-exist to gain a competitive edge.
2nd: Why both should co-exist?
Rising standard of living is not good when it is an effect of "growing trade deficits". Growing trade deficit(Bad)
Balanced trade is not good when it is an effect of "declining standard of living". declining standard of living(Bad)
A gives the competitive scenario:
"balance its trade while its standard of living rises"
Two goods together.
Ans: "A"