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# Prior to 1971, the United States

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Manager
Joined: 10 Apr 2018
Posts: 182
Prior to 1971, the United States  [#permalink]

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11 Oct 2018, 20:28
00:00

Difficulty:

75% (hard)

Question Stats:

55% (02:44) correct 45% (02:31) wrong based on 66 sessions

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Prior to 1971, the United States was on various forms of a gold standard through which the value of the dollar was backed by gold reserves and paper money could be redeemed for gold on demand. Since 1971, the United States dollar has been a fiat currency backed by "full faith and credit” of the government and not backed by, valued in, or convertible into gold. A gold standard restricts the ability of government to print money at will and to spend more than it earns in tax revenue. Besides, the economy has historically performed best under a gold standard. Therefore, for reasons above, the voters should vote for a party that backs the return of the gold standard in the country.

Which of the following data sets can be best used by the author of the above argument to further his conclusion?

(A)Major economic indicators of United States since 1980

(B)Expenditure on education and healthcare from 1960 to 2000

(C)Money printed by the government as proportion of the Gross Domestic Product from 1950 to 1970

(D)Growth in the difference between the revenue and expenditure figures for the government for the last 100 years beginning from 1901.

(E)Economic growth in the country in 1971 and in 1972.
Manager
Joined: 31 May 2015
Posts: 104
Re: Prior to 1971, the United States  [#permalink]

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12 Oct 2018, 01:16
I understand that D speaks about growth which is one of the ingredients of good economic performance, however, it is a bit confusing to go back a full century, if the argument is pivoting aroung the introduction of paper bills wouldn't it make more sense to go back to 1690 with the first ever colonial notes printed by the Massachusetts Bay Colony.
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Manager
Joined: 17 Mar 2018
Posts: 66
Re: Prior to 1971, the United States  [#permalink]

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12 Oct 2018, 01:28
I think the following lines are important to the question stem.
A gold standard restricts the ability of government to print money at will and to spend more than it earns in tax revenue. Besides, the economy has historically performed best under a gold standard. Therefore, for reasons above, the voters should vote for a party that backs the return of the gold standard in the country.

Since D refers to Income and Expenses and comparing economies in gold backed dollar era as well as faith backed dollar era helps to cement author's conclusion.
Re: Prior to 1971, the United States   [#permalink] 12 Oct 2018, 01:28
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