The high unemployment rates of the early 1960s occasioned a spirited

Question

New Project RC Butler 2019  -  Practice 2 RC Passages Everyday   
Passage # 421, Date: 30-Oct-2019
 This post is a part of New Project RC Butler 2019 .  Click here for Details

The high unemployment rates of the early 1960s occasioned a spirited debate within the economics profession. One group found the primary cause of unemployment in slow growth and the solution in economic expansion. The other found the major explanation in changes that had occurred in the supply and demand for labor and stressed measures for matching demand with supply.

The  expansionist  school of thought, with the Council of Economic Advisers as its leading advocates, attributed the persistently high unemployment level to a slow rate of economic growth resulting from a deficiency of aggregate demand for goods and services. The majority of this school endorsed the position of the Council that tax reduction would eventually reduce the unemployment level to 4% of the labor force with no other assistance. At 4%, bottlenecks in skilled labor, middle-level manpower, and professional personnel were expected to retard growth and generate wage-price pressures. To go beyond 4%, the interim goal of the Council, it was recognized that improved education, training and retraining, and other structural measures would be required.  Some expansionists insisted that the demand for goods and services was nearly satiated and that it was impossible for the private sector to absorb a significant increase in output.  In their estimate, only the lower-income fifth of the population and the public sector offered sufficient outlets for the productive efforts of the potential labor force. The fact that the needs of the poor and the many unmet demands for public services held higher priority than the demands of the marketplace in the value structure of this group no doubt influenced their economic judgments.

Those who found the major cause of unemployment in structural features were primarily labor economists, concerned professionally with efficient functioning of labor markets through pro-grams to develop skills and place individual workers. They maintained that increased aggregate demand was a necessary but not sufficient condition for reaching either the CEA’s 4% target or their own preferred 3%. This pessimism was based, in part, on the conclusion that unemployment among the young, the unskilled, minority groups, and depressed geographical areas is not easily attacked by increasing general demand. Further, their estimate of the numbers of potential members of the labor force who had withdrawn or not entered because of lack of employment opportunity was substantially higher than that of the CEA. They also projected that increased demand would put added pressure on skills already in short supply rather than employ the unemployed, and that because of technological change, which was replacing manpower, much higher levels of demand would be necessary to create the same number of jobs.

The structural school, too, had its hyperenthusiasts: Fiscal conservatives who, as an alternative to expansionary policies, argued the not very plausible position that a job was available for every person, provided only that he or she had the requisite skills or would relocate.  Such extremist positions aside, there was actually considerable agreement between two main groups, though this was not recognized at the time. Both realized the advisability of a tax cut to increase demand, and both needed to reduce unemployment below a point around 4%. In either case, the policy implications differed in emphasis and not in content.   1  
 B 
 1. The primary purpose of the passage is to

(A) suggest some ways in which tools to manipulate aggregate demand and eliminate structural deficiencies can be used to reduce the level of unemployment
(B) demonstrate that there was a good deal of agreement between the expansionist and structuralist theories on how to reduce unemployment in the 1960s
(C) explain the way in which structural inefficiencies prevent the achievement of a low rate of unemployment without wage-price pressures
(D) discuss the disunity within the expansionist and structuralist schools to show its relationship to the inability of the government to reduce unemployment to 4%
(E) describe the role of the Council of Economic Advisers in advocating expansionist policies to reduce unemployment to 4%

2  
 D 
 2. Which of the following is not mentioned in the passage as a possible barrier to achieving a 4% unemployment rate through increased aggregate demand?

(A) Technological innovation reduces the need for workers, so larger increases in demand are needed to employ the same number of workers.
(B) The increase in output necessary to meet an increase in aggregate demand requires skilled labor, which is already in short supply, rather than unskilled labor, which is available.
(C) An increase in aggregate demand will not create jobs for certain subgroups of unemployed persons such as minority groups and young and unskilled workers.
(D) Even if the tax reduction increases aggregate demand, many unemployed workers will be unwilling to relocate to jobs located in areas where there is a shortage of labor.
(E) An increase in the number of available jobs will encourage people not in the labor market to enter it, which in turn will keep the unemployment rate high.

3  
 C 
 3. The author’s treatment of the “hyperenthusiasts” ( Text in Red ) can best be described as one of

(A) strong approval
(B) lighthearted appreciation
(C) summary dismissal
(D) contemptuous sarcasm
(E) malicious rebuke

4  
 B 
 4. Which of the following best describes the difference between the position taken by the Council of Economic Advisers and that taken by dissenting expansionists ( Text in Blue )?

(A) Whereas the Council of Economic Advisers emphasized the need for a tax cut to stimulate general demand, the dissenters stressed the importance of structural measures such as education and training.
(B) Although the dissenters agreed that an increase in demand was necessary to reduce unemployment, they argued government spending to increase demand should fund programs for lower income groups and public services.
(C) The Council of Economic Advisers set a 4% unemployment rate as its goal, and dissenting expansionists advocated a goal of 3%.
(D) The Council of Economic Advisers rejected the contention, advanced by the dissenting expansionists, that a tax cut would help to create increased demand.
(E) The dissenting expansionists were critical of the Council of Economic Advisers because members of the Council advocated politically conservative policies.

5  
 B 
 5. The passage contains information that helps to explain which of the following?

(A) The fact that the economy did not expand rapidly in the early 1960s.
(B) The start of wage-price pressures as the unemployment rate approaches 4%.
(C) The harmful effects of unemployment on an individual worker.
(D) The domination of the Council of Economics by expansionists.
(E) The lack of education and training among workers in some sectors.

6  
 B 
 6. Which of the following best describes the author’s attitude toward the expansionists ( Highlighted )?

(A) The author doubts the validity of their conclusions because they were not trained economists.
(B) The author discounts the value of their judgment because it was colored by their political viewpoint.
(C) The author refuses to evaluate the value of their contention because he lacks sufficient information.
(D) The author accepts their viewpoint until it can be demonstrated that it is incorrect.
(E) The author endorses the principles on which their conclusions are based but believes their proposal to be impractical.

7  
 A 
 7. It can be inferred from the passage that the hyperenthusiasts ( Text in Red ) contended that

(A) the problem of unemployment could be solved without government retraining and education programs
(B) the number of persons unemployed was greatly overestimated by the Council of Economic Advisers
(C) a goal of 3% unemployment could not be reached unless the government enacted retraining and education programs
(D) the poor had a greater need for expanded government services than the more affluent portion of the population
(E) fiscal policies alone were powerful enough to reduce the unemployment rate to 4% of the work force

Source:  Master GMAT   (122/696)

Mansoor50 · Answer

Can someone explain #2? i keep answering D!!!!!!

Sajjad1994 · Answer

Official Explanation

2. Which of the following is not mentioned in the passage as a possible barrier to achieving a 4% unemployment rate through increased aggregate demand?

Difficulty Level:   700

Explanation

This is an  explicit idea question.  Each of the incorrect answers is mentioned as a possible barrier to achieving 4% unemployment in the discussion of structural inefficiencies of the third paragraph. There reference is made to the effect of technological innovation, the shortage of skilled labor, the problem of minority and unskilled labor, and the reserve of workers not yet counted as being in the labor force.

There is no mention, however, of the need to relocate workers to areas of labor shortage. The only reference to relocation is in the final paragraph. Since  (D)  is never mentioned as a possible barrier to achieving the 4% goal, it is the correct answer.

Answer: D

Hope it helps

zoezhuyan · Answer

is it 600-700 level?
why it is so tough for me?
 2/7 correct, without timer, only Q1 and Q2 are correct.
I still cannot get what the passage say and its logic.

kntombat · Answer

SajjadAhmad  , could you provide the OE for questions 4,5,6 as and when possible. I would love to know where I went wrong.
thanks.

surajx23 · Answer

Can someone explain me Q5, Q6 & Q7. Thanks in advance.

Sajjad1994 · Answer

Official Explanation

4. Which of the following best describes the difference between the position taken by the Council of Economic Advisers and that taken by dissenting expansionists (Text in Blue)?

Difficulty Level:   650+

This is an  explicit idea question.  The needed reference is found in the  second paragraph.  The difference between the CEA and the dissenting expansionists grew out of the question of where to spend the money that would be used to stimulate the economy. The dissenting faction wanted to target the expansionary spending for public services and low-income groups.

(B)  presents this difference very well.  (A)  is incorrect and conflates the dissenting expansionists (paragraph two) and the structuralists (paragraph three).  (C)  commits the same error.  (D)  represents a misreading of the second paragraph: The CEA were expansionists.  (E)  is incorrect since the passage does not state that the CEA were conservatives.

The correct answer is (B).

5. The passage contains information that helps to explain which of the following?

Difficulty Level:   700

Explanation

This is an  explicit idea question.  Information that would bear on the issue raised by  (B)  is included in the  third paragraph.  As for  (A) , there is no such information in the passage.

In the  first paragraph , the author mentions that the economy failed to expand rapidly in the early 1960s, but offers no explanation for that phenomenon.

And  (C)  is never mentioned at any point in the text.  (D)  is a political question that is not addressed by the passage, and  (E)  is an historical one that is not answered.

The correct answer is (B).

6. Which of the following best describes the author’s attitude toward the expansionists (Highlighted)?

Difficulty Level:   750+

Explanation

The author mentions a dissenting group of expansionists in the closing lines of  paragraph two . The author remarks of their arguments that their commitment to certain political ideals likely interfered with their economic judgments. For this reason, the author places very little faith in their arguments.  (B)  nicely brings out this point.

(A)  is incorrect. The author does discount the value of their conclusions, but not because they were not trained as economists.

As for  (C) , there is nothing that suggests that the author lacks information. Rather, it seems from the passage that the author has sufficient information to discount the position.

(D)  is clearly in contradiction to this analysis and must be incorrect, and  (E)  can be eliminated on the same ground.

The correct answer is (B).

7. It can be inferred from the passage that the hyperenthusiasts (Text in Red) contended that

Difficulty Level:   700-750

Explanation

The hyperenthusiasts used structuralisttype arguments to contend that jobs were already available. That being the case, the hyperenthusiasts dissented from both the positions of the expansionists and the structuralists who believed unemployment to be a problem. We may infer, then, that the essence of the hyperenthusiasts’ position was that no government action was needed at all—at least no government action of the sort being discussed by the main camps described by the author.

As for  (B) , nowhere in the passage does the author state or even hint that anyone overestimated the number of people out of work.

As for  (C) , this represents a reading that confuses the hyperenthusiasts (paragraph four) with the main-line structuralists (paragraph three).

(D)  is incorrect and conflates the hyperenthusiasts of the expansionary school of thought with those of the structuralist school.

Finally,  (E)  is incorrect since it describes the position of the main group of expansionists.

The correct answer is (A).

Hope it helps

ricardorr04 · Answer

got 4/6 correct. got questions 2 and 6 wrong.

didnt think it was a hard read by any means, but those two questions seemed tricky...

shauryahanda · Answer

I am stuck with one of the easier questions, 
I feel that the passage's main purpose was not to show that the 2 approaches are similar, but rather discuss the 2 approaches and show how they can affect.
Although none of the options exactly matched , i felt 'a' was closer.

It would be helpful if someone could help me with this

Posted from my mobile device

Agarwal2003 · Answer

Can you please point out the specific lines from which option E can be inferred as a barrier? Also, the D option is considered a barrier by hyperenthusiasts who were a part of the structural school

riddhichothani11 · Answer

Can someone please explain Q1?

Sajjad1994 · Answer

1. The primary purpose of the passage is to

Explanation

This is an inference question. In the third paragraph, the author discusses the effect of drunk driving laws, stating that after the implementation of the Road Safety Act in Britain, motor vehicle fatalities fell considerably. On this basis, we infer that the RSA was a law aimed at drunk driving. We can eliminate  (D)  and  (E)  on this ground.  (C)  can be eliminated as not warranted on the basis of this information. It is not clear whether the number of arrests increased. Equally consistent with the passage is the conclusion that the number of arrests dropped because people were no longer driving while intoxicated.  (C)  is incorrect for a further reason, the justification for  (B) .

(B)  and  (A)  are fairly close since both describe the RSA as a law aimed at drunk driving. But the last sentence of the third paragraph calls for  (B)  over  (A) . As people learned that they would not get caught for drunk driving, the law became less effective. This suggests that the RSA made drunk driving illegal, not that it lowered the BAC required for conviction. This makes sense of the sentence  “ . . . they could drink and not be stopped.”  If  (A)  were correct, this sentence would have to read  “ . . . they could drink the same amount and not be convicted.”

The correct answer is (B).

The high unemployment rates of the early 1960s occasioned a spirited

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GMAT Reading Comprehension (RC) Questions

The high unemployment rates of the early 1960s occasioned a spirited

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