The projection in the latest quarterly inflation report is for growth

Question

The projection in the latest quarterly inflation report is for growth to pick up to 2.8 percent. For this forecast to be realized, household spending and domestic consumption would need to increase noticeably from its current lackluster level. The economy has grown below its long-term trend for three out of the last four quarters. Wage growth was under control and the retail and housing markets, while not getting worse, were not getting any better either. Import prices had started to add to inflation after years of deflation in the wake of the $25 jump in the barrel price of crude. But most economists were for ignoring the first-round impact of this rise and waiting for any domestic second effect – higher prices in the shops – before taking action.That action will almost certainly involve interest rate increases, the effect of which would be to squeeze household spending and knock back inflation. The economy would then have to wait for the stable job market and increases in incomes and wage growth to diminish the effect of the rate increase over the medium term. Eventually these factors would give rise to domestic growth on or above the long-term trend. In the meantime, the risk of a full-scale consumer recession or a collapse in house prices are both very unlikely.    1 
 1. Which of the following is stated as a factor that would give rise to growth on or above the long-term trend?

A. pay deal inflation
B. consumer confidence
C. consumer spending
D. house price increases
E. import price deflation

2 
 2. Which of the following statements would the author of the passage most likely agree with?

A. The wider community of economists are split over whether monetary policy should pay heed to the immediate price impact from oil.
B. Broadly speaking, economists agree that no immediate action should be taken over inflationary effects of the $25 jump in the price of crude.
C. The wider community of economists are against the view that monetary policy should take no action over the immediate price impact from oil.
D. The wider community of economists are against taking no action at all over the inflationary effect of the $25 jump in the price of crude.
E. Most economists are for ignoring any rise in non-oil inflation.

3 
 3. For the projection in the latest quarterly inflation report to be realized the author would expect:

A. expenditure to get no worse
B. spending to pick up
C. import inflation to continue
D. interest rates to rise notably
E. the economy to grow faster than in the first half

4 
 4. For the author, the 64 million dollar question is:

A. In the short term do interest rates have to rise?
B. Will the price of crude continue to increase?
C. Must oil price inflation lead to higher wages and shop prices?
D. Is labor market inflation sufficiently sustainable to eventually counter any interest rate increase?
E. At what rate over the short, medium and long term will the economy grow?

RC Butler 2022  -  Practice Two RC Passages Everyday.   
Passage # 70 Date: 16-Feb-2022
 This question is a part of RC Butler 2022 .  Click here for Details

Source: How to pass the GMAT

Ghostrider3147 · Answer

Sajjad1994  can u please explain Q4 and solution??
I don't know how to react to such type of questions.

Posted from my mobile device

Sajjad1994 · Answer

Official Explanation

4. For the author, the 64 million dollar question is:

Explanation

64 million dollar question means the key question. To identify the key question from the author’s perspective, first identify the main theme of the passage. While the passage is wide-ranging in its scope it returns repeatedly to the issue of domestic growth and only suggested answer  E  refers to this subject. The other answers are factors considered in dealing with this subject.

Answer: E

chrisgeo · Answer

answer for Q.2?  Sajjad1994

Sajjad1994 · Answer

Official Explanation

2. Which of the following statements would the author of the passage most likely agree with?

Difficulty Level:   700

Explanation

The passage states that most economists agreed with the monetary policy of ignoring the first-round impact of this rise in the price of oil and waiting for any domestic second effect – higher prices in the shops – before taking action. Only statement  D  is consistent with this view.

Answer: D

GabyNguyen · Answer

Why is D the answer for question 2? According to the passage, "most economists were for ignoring the first-round impact of this rise and waiting for any domestic second effect". It means that they agree not to take any action. So, the answer should be B, right?

For D, "The wider community of economists are  against taking no action  at all over the inflationary effect of the $25 jump in the price of crude." --> means that they don't agree about taking no action.

Please explain. Thank you

Prob2303 · Answer

Hello Sajjad,

Can I get a summary of the passage and the OE for Q1?

Sajjad1994 · Answer

Summary:

The inflation report forecasts 2.8% growth, contingent on a boost in household spending. Despite recent economic challenges, economists expect eventual domestic growth driven by stable job markets and income growth, with a low likelihood of a consumer recession or housing collapse in the interim. The passage also discusses the impact of import prices and the potential for interest rate increases.

Official Explanation

1. Which of the following is stated as a factor that would give rise to growth on or above the long-term trend?

Explanation

The passage states that the stable job market and increases in income and wages would give rise to growth in the medium term. Pay deal inflation is another way of referring to wage growth.

Answer: A

KHannigan · Answer

Pay deal inflation is not idiomatic in English so this question erroneously relies either on translation of the phrase from another language, or some other anachronism. The first result on google for "pay deal inflation" is this forum post. The question is malformed.

KHannigan · Answer

This question part also has an issue: "B" is also correct, because not supporting "immediate action" very much comports with supporting a second-round action but not a first-round action.

KHannigan · Answer

A 64-million dollar question is not idiomatically equivalent to a "general" or "overall" question. On the contrary, a 64-million (or thousand) dollar question suggests something  critical , which may be specific, not necessarily general in scope.

The overall subject that the passage is considering is economic growth, and the general question is the about the future growth in both the medium and long term, but the 64-million dollar question (i.e., what said medium and long term economic growth hinges on as a crux) is whether domestic second effects appear, and whether the likely resulting action is sufficiently counterbalanced and a recession avoided.

This is the third question in a batch of 4 that appears to have design errors, I'd suggest the whole submission should be amended.

The projection in the latest quarterly inflation report is for growth

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