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I think Answer B - (B) Sometimes the cause of a problem may also provide its solution.
Cause of the problem = Imagination = solution to the problem
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In other words: Once imagination develops in a child, it can be used in two contrasting ways:
(i) visualizing imaginary creatures that torment the child
(ii) visualizing creatures that can be seen as an ally, powerful enough to ward of imaginary threats.

The type of situation described above most closely conforms to which one of the following propositions?


(A) Some newly developed capacities only give rise to problems. - does not mention any kind of contrast. Hence, eliminate (A).

(B) Sometimes the cause of a problem may also provide its solution. - (B) implies that the same event can have two different results. This is similar to how imagination can be used to arrive at two different experiences for the child. Hence, (B) is the right answer choice.

(C) Children are not able to distinguish between real and imaginary threats. - (C) talks about an incapability of children. The passage does not mention any incapability, rather it highlights a contrast. Since (C) does not have any sort of contrast mentioned, eliminate (C).

(D) The most effective way for children to address their fears is to acknowledge them. - (D) does not have any sort of contrast mentioned. Hence, eliminate (D).

(E) Most problems associated with child-rearing can be solved with a little imagination. - (E) suggests a solution, but does not highlight a different result accruing from the same event or cause, a contrast that is indeed highlighted in the passage. Hence, eliminate (E).
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(B) Sometimes the cause of a problem may also provide its solution.
It mimics the argument's logic that since a child's imagination becomes developed (cause) and this leads to imagine creatures that torment the child (effect). In fact, this new ability can be used for good and imagine the toy as an ally. so the cause of the problem may also (the same language from the argument " may also be used to render these creatures harmless." provide the solution. So Correct Answer.
(E) Most problems associated with child-rearing can be solved with a little imagination.
Does not involve a cause and effect relationship, keeps the matter general.
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Bunuel
Once a child’s imagination becomes developed, a host of imaginary creatures may torment the child. But this newly developed cognitive capacity may also be used to render these creatures harmless. For instance, a child’s new toy may be imagined as an ally, powerful enough to ward off any imaginary threats.

The type of situation described above most closely conforms to which one of the following propositions?


(A) Some newly developed capacities only give rise to problems.

(B) Sometimes the cause of a problem may also provide its solution.

(C) Children are not able to distinguish between real and imaginary threats.

(D) The most effective way for children to address their fears is to acknowledge them.

(E) Most problems associated with child-rearing can be solved with a little imagination.
The problem of child's imagination can itself be used to eliminate the fears of the child make it his/her friend.

Option B fits nicely.­
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