Recently, a new school of economics called steady state economics has

Recently, a new school of economics called steady
state economics has seriously challenged neoclassical
economics, the reigning school in Western economic
decision making. According to the neoclassical model,
(5) an economy is a closed system involving only the
circular flow of exchange value between producers and
consumers. Therefore, no noneconomic constraints
impinge upon the economy and growth has no limits.
Indeed, some neoclassical economists argue that
(10) growth itself is crucial, because, they claim, the
solutions to problems often associated with growth
(income inequities, for example) can be found only in
the capital that further growth creates.

Steady-state economists believe the neoclassical
(15) model to be unrealistic and hold that the economy is
dependent on nature. Resources, they argue, enter the
economy as raw material and exit as consumed
products or waste; the greater the resources, the greater
the size of the economy. According to these
(20) economists, nature’s limited capacity to regenerate raw
material and absorb waste suggests that there is an
optimal size for the economy, and that growth beyond
this ideal point would increase the cost to the
environment at a faster rate than the benefit to
(25) producers and consumers, generating cycles that
impoverish rather than enrich. Steady-state economists
thus believe that the concept of an ever growing
economy is dangerous, and that the only alternative is
to maintain a state in which the economy remains in
(30) equilibrium with nature. Neoclassical economists, on
the other hand, consider nature to be just one element
of the economy rather than an outside constraint,
believing that natural resources, if depleted, can be
replaced with other elements—i.e., human-made
(35) resources—that will allow the economy to continue
with its process of unlimited growth.

Some steady-state economists, pointing to the
widening disparity between indices of actual growth
(which simply count the total monetary value of goods
(40) and services) and the index of environmentally
sustainable growth (which is based on personal
consumption, factoring in depletion of raw materials
and production costs), believe that Western economies
have already exceeded their optimal size. In response
(45) to the warnings from neoclassical economists that
checking economic growth only leads to economic
stagnation, they argue that there are alternatives to
growth that still accomplish what is required of any
economy: the satisfaction of human wants. One of
(50) the alternatives is conservation. Conservation—for
example, increasing the efficiency of resource use
through means such as recycling—differs from growth
in that it is qualitative, not quantitative, requiring
improvement in resource management rather than an
(55) increase in the amount of resources. One measure of
the success of a steady-state economy would be the
degree to which it could implement alternatives to
growth, such as conservation, without sacrificing the
ability to satisfy the wants of producers and consumers.

1. Which one of the following most completely and accurately expresses the main point of the passage?

(A) Neoclassical economists, who, unlike steady state economists, hold that economic growth is not subject to outside constraints, believe that nature is just one element of the economy and that if natural resources in Western economies are depleted they can be replaced with human-made resources.
(B) Some neoclassical economists, who, unlike steady-state economists, hold that growth is crucial to the health of economies, believe that the solutions to certain problems in Western economies can thus be found in the additional capital generated by unlimited growth.
(C) Some steady-state economists, who, unlike neoclassical economists, hold that unlimited growth is neither possible nor desirable, believe that Western economies should limit economic growth by adopting conservation strategies, even if such strategies lead temporarily to economic stagnation.
(D) Some steady-state economists, who, unlike neoclassical economists, hold that the optimal sizes of economies are limited by the availability of natural resources, believe that Western economies should limit economic growth and that, with alternatives like conservation, satisfaction of human wants need not be sacrificed.
(E) Steady-state and neoclassical economists, who both hold that economies involve the circular flow of exchange value between producers and consumers, nevertheless differ over the most effective way of guaranteeing that a steady increase in this exchange value continues unimpeded in Western economies.

2. Based on the passage, neoclassical economists would likely hold that steady-state economists are wrong to believe each of the following EXCEPT:

(A) The environment’s ability to yield raw material is limited.
(B) Natural resources are an external constraint on economies.
(C) The concept of unlimited economic growth is dangerous.
(D) Western economies have exceeded their optimal size.
(E) Economies have certain optimal sizes.

3. According to the passage, steady-state economists believe that unlimited economic growth is dangerous because it

(A) may deplete natural resources faster than other natural resources are discovered to replace them
(B) may convert natural resources into products faster than more efficient resource use can compensate for
(C) may proliferate goods and services faster than it generates new markets for them
(D) may create income inequities faster than it creates the capital needed to redress them
(E) may increase the cost to the environment faster than it increases benefits to producers and consumers

4. A steady-state economist would be LEAST likely to endorse which one of the following as a means of helping a steady-state economy reduce growth without compromising its ability to satisfy human wants?

(A) a manufacturer’s commitment to recycle its product packaging
(B) a manufacturer’s decision to use a less expensive fuel in its production process
(C) a manufacturer’s implementation of a quality control process to reduce the output of defective products
(D) a manufacturer’s conversion from one type of production process to another with greater fuel efficiency
(E) a manufacturer’s reduction of output in order to eliminate an overproduction problem

5. Based on the passage, a steady-state economist is most likely to claim that a successful economy is one that satisfies which one of the following principles?

(A) A successful economy uses human-made resources in addition to natural resources.
(B) A successful economy satisfies human wants faster than it creates new ones.
(C) A successful economy maintains an equilibrium with nature while still satisfying human wants.
(D) A successful economy implements every possible means to prevent growth.
(E) A successful economy satisfies the wants of producers and consumers by using resources to spur growth.

6. In the view of steady-state economists, which one of the following is a noneconomic constraint as referred to in line 7?

(A) the total amount of human wants
(B) the index of environmentally sustainable growth
(C) the capacity of nature to absorb waste
(D) the problems associated with economic growth
(E) the possibility of economic stagnation

7. Which one of the following most accurately describes what the last paragraph does in the passage?

(A) It contradicts the ways in which the two economic schools interpret certain data and gives a criterion for judging between them based on the basic goals of an economy.
(B) It gives an example that illustrates the weakness of the new economic school and recommends an economic policy based on the basic goals of the prevailing economic school.
(C) It introduces an objection to the new economic school and argues that the policies of the new economic school would be less successful than growth-oriented economic policies at achieving the basic goal an economy must meet.
(D) It notes an objection to implementing the policies of the new economic school and identifies an additional policy that can help avoid that objection and still meet the goal an economy must meet.
(E) It contrasts the policy of the prevailing economic school with the recommendation mentioned earlier of the new economic school and shows that they are based on differing views on the basic goal an economy must meet.

8. The passage suggests which one of the following about neoclassical economists?

(A) They assume that natural resources are infinitely available.
(B) They assume that human-made resources are infinitely available.
(C) They assume that availability of resources places an upper limit on growth.
(D) They assume that efficient management of resources is necessary to growth.
(E) They assume that human-made resources are preferable to natural resources.