The United States government has a long-standing policy of using

Question

The United States government has a long-standing policy of using federal funds to keep small business viable. The Small Business Act of 1953 authorized the Small Business Administration (SBA) to enter into contracts with government agencies having procurement powers and to arrange for fulfillment of these contracts by awarding subcontracts to small businesses. In the mid 1960's, during the war on poverty years, Congress hoped to encourage minority entrepreneurs by directing such funding to minority businesses. At first this funding was directed toward minority entrepreneurs with very low incomes. A 1967 amendment to the Economic Opportunity Act directed the SBA to pay special attention to minority-owned businesses located in urban or rural areas characterized by high proportions of unemployed or low-income individuals. Since then, the answer given to the fundamental question of who the recipients should be—the most economically disadvantaged or those with the best prospects for business success—has changed, and the social goals of the programs have shifted, resulting in policy changes.

The first shift occurred during the early 1970's. While the goal of assisting the economically disadvantaged entrepreneur remained, a new goal emerged: to remedy the effects of past discrimination. In fact, in 1970 the SBA explicitly stated that their main goal was to increase the number of minority-owned businesses. At the time, minorities constituted seventeen percent of the nation's population, but only four percent of the nation's self-employed. This  ownership gap  was held to be the result of past discrimination. Increasing the number of minority-owned firms was seen as a way to remedy this problem. In that context, providing funding to minority entrepreneurs in middle- and high-income brackets seemed justified.

In the late 1970's, the goals of minority-business funding programs shifted again. At the minority business Development Agency, for example, the goal of increasing numbers of minority-owned firms was supplanted by the goal of creating and assisting more minority-owned substantive firms with future growth potential. Assisting manufacturers or wholesalers became far more important than assisting small service businesses. Minority-business funding programs were now justified as instruments for economic development, particularly for creating jobs in minority communities of high unemployment.   1 
 1. It can be inferred that the " ownership gap " (see underlined text) would be narrowed if which of the following were to occur?

(A) Minority entrepreneurs received a percentage of government contracts equal to that received by nonminority entrepreneurs.
(B) Middle- and high-income minority entrepreneurs gave more assistance to their low-income counterparts in the business community.
(C) Minority entrepreneurs hired a percentage of minority employees equal to the percentage of minority residents in their own communities.
(D) The percentage of self-employed minority persons rose to more than ten percent of all self-employed persons.
(E) Seventeen percent of all persons employed in small businesses were self-employed.

2 
 2. Which of the following best describes the function of the second paragraph in the passage as a whole?

(A) It narrows the scope of the topic introduced in the first paragraph.
(B) It presents an example of the type of change discussed in the first paragraph.
(C) It cites the most striking instance of historical change in a particular government policy.
(D) It explains the rationale for the creation of the government agency whose operations are discussed in the first paragraph.
(E) It presents the results of policies adopted by the federal government.

3 
 3. According to the passage, in 1970 funding to minority entrepreneurs focused primarily on which of the following?

(A) Alleviating chronic unemployment in urban areas
(B) Narrowing the ownership gap
(C) Assisting minority-owned businesses with growth potential
(D) Awarding subcontracts to businesses that encouraged community development
(E) Targeting the most economically disadvantaged minority-owned businesses

4 
 4. The passage mentions which of the following as a basic consideration in administering minority-business funding programs?

(A) Coming up with the funding for the programs
(B) Encouraging government agencies to assist middle- and high-income minority entrepreneurs
(C) Recognizing the profit potential of small service businesses in urban communities
(D) Determining who should be the recipients of the funding
(E) Determining which entrepreneurs are likely to succeed

5 
 5. The primary purpose of the passage is to

A. discuss historical changes in a government policy
B. describe the role of Congress in regulating the work of the SBA
C. contrast types of funding sources used by minority businesses
D. correct a misconception about minority entrepreneurship
E. advocate an alternative approach to funding minority entrepreneurs

Zarrolou · Accepted Answer

It can be inferred that the "ownership gap" (see underlined text) would be narrowed if which of the following were to occur?

"At the time, minorities constituted seventeen percent of the nation's population, but only four percent of the nation's self-employed. This ownership gap was held to be the result of past discrimination." 
Minorities = 17% population. 
Minorities = 4% self employed. <== this is the "gap"
 "  Increasing the number   of minority-owned firms was seen as a way to remedy this problem" . In "inference" questions the answer is already in the passage.
This is how the text says that the gap can be narrowed. Which answer can be seen as a rewording of this?

A: Minority entrepreneurs received a percentage of government contracts equal to that received by nonminority entrepreneurs. 
 B: Middle- and high-income minority entrepreneurs gave more assistance to their low-income counterparts in the business community. 
 C: Minority entrepreneurs hired a percentage of minority emlpoyees equal to the percentage of minority residents in their own communities. 
 D:  The percentage of self-employed minority persons rose  to more than ten percent of all self-employed persons. <==CORRECT
 E: Seventeen percent of all persons employed in small businesses were self-employed.

Which of the following best describes the function of the second paragraph in the passage as a whole?

....
Since then, the answer given to the fundamental question of who the recipients should be-the most economically disadvantaged or those with the best prospects for business success-has changed, and   the social goals of the programs have shifted  , resulting in policy changes.

The first shift   occured during the early 1970's.
...
 
The second paragraph is connected to the first one because it discusses something that the first one presented.
 
 A: It narrows the scope of the topic introduced in the first paragraph. 
 B: It presents an example of the type of change discuseed in the first paragraph. <==CORRECT
 C: It cites the most striking instance of historical change in a particular government policy.
D: It explains the rationale for the creation of the government agency whose operations are discussed in the first paragraph.
E: It presents the results of policies adpoted by the federal government.

According to the passage, in 1970 funding to minority entrepreneurs focused primarily on which of the following?

While the goal of assisting the economically disadvantaged entrepreneur remained, a new goal emerged: to remedy the effects of past discrimination. (...) This ownership gap was held to be the result of past discrimination.Increasing the number of minority-owned firms was seen as a way to remedy this problem.  
Increasing the number of minority-owned firms ==> reduce the GAP (the new goal or priority/focus in 1970).

A: Alleviating chronic unemployment in urban areas 
 B: Narrowing the ownership gap <== CORRECT
 C: Assisting minority-owned businesses with growth potential
D: Awarding subcontracts to businesses that encouraged community development
E: Targeting the most economically disadvantaged minority-owned businesses

DmitryFarberMPrep · Answer

LakerFan24 ,

Q2: The ideas in p2 have already been set up in p1. The first paragraph starts talking about shifts in program goals, and the second paragraph advances the narrative by showing one of those goals. That doesn't narrow the scope, since that's already the level the discussion was on. Narrowing the scope would be if the first paragraph were about the program as a whole, and we zoomed in to see how that played out in a particular community or within one specific industry. Although p2 provides an example, as B indicates, it maintains a high-level view of the overall program and its goals.

Q3: Watch carefully for the scope of the question. We're asked specifically about 1970, not the 1970's, so p3 is out of scope. Only p2 talks about 1970. This is a good example of why it's important to develop a strong feel for the author's overall point before diving into specific questions. If you've identified that overall, the author is showing how goals for supporting minority-owned businesses shifted over time, you're more likely to catch the difference between 1970 and 1970's in this question. Why? Because the goals shifted during the 1970's, so there's no way to answer a question about the  primary focus  during that entire period of time!

prasi55 · Answer

Q3 asks about "in 1970". The second paragraph mentions that "in 1970" the stated main goal was to increase the number of minority-owned businesses. The subsequent sentences identify this as the "ownership gap". Hence B is correct.

The focus on assisting minority-owned firms with growth potential occurred only in the late 1970s, not "in 1970". Note that the question does not ask "in the 1970s."

JarvisR · Answer

Time taken 13 mins.

1. It can be inferred that the "ownership gap" (see highlighted text) would be narrowed if which of the following were to occur?
D. The percentage of self-employed minority persons rose to more than ten percent of all self-employed persons.
"At the time, minorities constituted seventeen percent of the nation's population, but only four percent of the nation's self- employed. This ownership gap was held to be the result of past discrimination. Increasing the number of minority-owned firms was seen as a way to remedy this problem."

2. According to the passage, in 1970 funding to minority entrepreneurs focused primarily on which of the following?
B. Narrowing the ownership gap
"The first shift occurred during the early 1970's. While the goal of assisting the economically disadvantaged entrepreneur remained, a new goal emerged: to remedy the effects of past discrimination. In fact, in 1970 the SBA explicitly stated that their main goal was to increase the number of minority-owned businesses"

3. Which of the following best describes the function of the second paragraph in the passage as a whole?
B. It presents an example of the type of change discussed in the first paragraph.
"Since then, the answer given to the fundamental question of who the recipients should be—the most economically disadvantaged or those with the best prospects for business success—has changed, and the social goals of the programs have shifted, resulting in policy changes.

The first shift occurred during the early 1970's"

4. The passage mentions which of the following as a basic consideration in administering minority-business funding programs?
D. Determining who should be the recipients of the funding
"A 1967 amendment to the Economic Opportunity Act directed the SBA to pay special attention to minority-owned businesses located in urban or rural areas characterized by high proportions of unemployed or low-income individuals. Since then, the answer given to the fundamental question of who the recipients should be"

5. The primary purpose of the passage is to
A. discuss historical changes in a government policy

AmoyV · Answer

Time taken: 9:08 mins
1. It can be inferred that the "ownership gap" (see highlighted text) would be narrowed if which of the following were to occur?
A. Minority entrepreneurs received a percentage of government contracts equal to that received by nonminority entrepreneurs. Nothing like that 
B. Middle- and high-income minority entrepreneurs gave more assistance to their low-income counterparts in the business community. Help is to be given by the govt not only to low-income people but also to middle and high income people in some cases 
C. Minority entrepreneurs hired a percentage of minority employees equal to the percentage of minority residents in their own communities. Question is to increase % of self-employed. Not the % of employed 
D. The percentage of self-employed minority persons rose to more than ten percent of all self-employed persons. This increases the % of self-employed and decreases the gap 
E. Seventeen percent of all persons employed in small businesses were self-employed. We are concerned about minorities here not the total population.

2. According to the passage, in 1970 funding to minority entrepreneurs focused primarily on which of the following?
A. Alleviating chronic unemployment in urban areas We are concerned about self-employment and not total employment 
B. Narrowing the ownership gap Yes 
C. Assisting minority-owned businesses with growth potential This was a thing of the past and subsequently was adopted again in the future. But is not part of our time frame in question. 
D. Awarding subcontracts to businesses that encouraged community development No mention of community development 
E. Targeting the most economically disadvantaged minority-owned businesses Take out the "most" and this could be the right answer.

3. Which of the following best describes the function of the second paragraph in the passage as a whole?
A. It narrows the scope of the topic introduced in the first paragraph. It gives a part of the history of enactment of the assistance 
B. It presents an example of the type of change discussed in the first paragraph. It is an example of the many changes that the execution of the law went through 
C. It cites the most striking instance of historical change in a particular government policy. Yes. It is the first of the many historical changes 
D. It explains the rationale for the creation of the government agency whose operations are discussed in the first paragraph. Doesnt do that 
E. It presents the results of policies adopted by the federal government. Doesnt do that

4. The passage mentions which of the following as a basic consideration in administering minority-business funding programs?
A. Coming up with funding for the programs It is govt funded. No problem mentioned in the passage reagrading funding 
B. Encouraging government agencies to assist middle and high-income minority entrepreneurs No problem with this mentioned 
C. Recognizing the profit potential of small service businesses in urban communities Nothing in the passage to support this 
D. Determining who should be the recipients of the funding There were a lot of times the policy changed and each time the policy changed, it changed wrt who would receive the funding. 
E. Determining which entrepreneurs are likely to succeed Nothing to support this in the passage

5. The primary purpose of the passage is to
A. discuss historical changes in a government policy  Yes. It does that 
B. describe the role of Congress in regulating the work of the SBA Nope. The Congress is not even mentioned after the 1st paragraph, where it passed the policy. 
C. contrast types of funding sources used by minority businesses Here only 1 type of funding ie govt funding is discussed. No mention or contrasting different funding 
D. correct a misconception about minority entrepreneurship Passage shows the ways a policy was enacted. There is nothing in the passage to support this option 
E. advocate an alternative approach to funding minority entrepreneurs There is no mention of any other funding in the passage and hence govt funding may not be the "alternative approach of funding minority entrepreneurs"

LakerFan24 · Answer

tough passage.

Q2 -- what makes A/C "B" better than "A"? It is true that in the 2nd paragraph, the scope is literally confined to "remedy the effects of past discrimination" -- as in, that's literally the only thing going on in that paragraph. I don't necessarily see how "A" is wrong (I was debating hard between "A" & "B")

Q3 -- what makes "B" correct? From paragraph 3, it is pretty clear that the "goal of increasing the # of minority-owned firms" was " supplanted  by the goal of creating and assisting minority-owned firms WITH GROWTH POTENTIAL". Doesn't "C" literally spell this out?

^ need explanation b/c otherwise, this seems really controversial

Ravindra.here · Answer

GMATNinja  can you please explain how option d is correct in the last question. I think
determining succesful entrepreneurs was the goal . Please explain this

GMATNinja · Answer

Refer to the last sentence of the first paragraph: "Since  , the answer given to the  fundamental question  of who the recipients should be—the most economically disadvantaged or those with the best prospects for business success—has changed, and the social goals of the programs have shifted, resulting in policy changes."

The fact that the recipients have changed tell us that those administering the programs are considering WHO should receive the funding. If choice (D) were not a basic consideration, then those administering the programs would NOT ask the fundamental question of who the recipients should be. We are told that the question of who the recipients should be (i.e. which groups should be given funding) is fundamental, impacting the basic goals and directions of such programs.

The passage mentions a couple shifts in policy that impacted who received funding. For example, "in 1970 the SBA explicitly stated that their main goal was to increase the number of minority-owned businesses." In the late 1970s, one agency adopted "the goal of creating and assisting more minority-owned substantive firms with future growth potential."

However, the passage makes no mention of analyzing/predicting which entrepreneurs are  likely to succeed . Choosing the individual people and businesses within those groups might be a secondary question that involves considering which entrepreneurs are likely to succeed, but the passage does not talk about such considerations.

Thus, (D) is a better answer than (E).

SidJainGMAT · Answer

Hi Zarrolou and Verbal Moderators ( GMATNinja , daagh , @egmat), In Q1 how did you eliminate option E. Could you please explain it? Also, for Q3, how do we know that passage is talking about early 1970.. Question doesn't mention this.. It can be late 1970's as well. Can you please explain this as well? Thanks in advance!

daagh · Answer

The passage talks about 17% of the total population of the US. E talks about Seventeen percent of all persons employed in small businesses. E is out of scope.

Please note C talk about the specific year of 1970. It is not concerned about any early - 1970' or - 1970's or late -1970s.

dcummins · Answer

Passage Map
 P1: Intro discussion on US government's assistance of small businesses
P2: Discuss shift in focus of assistance to aid minorities own businesses to remedy past discrim.
P3: Discuss a second shift - focus on growth of minority owned businesses

Q1 - Inference  
P2 states that providing funding to middle and high-income bracket entrepreneurs seems justified because of the ownership gap.

A - It's nowhere stated or inferred that non minorities were given an advantage in the awarding of contracts
B - This isn't what we should deduce. The gap exists because 17% of the pop = minority, but only 4% are self employed
C - Doesn't make sense as the gap is in self-employed, not employed persons. Incorrect.
D - This is the only thing that makes sense. If only 4% of all self-employed are minorities, then obviously the gap between 4 and 17% would decrease if the percentage increased to above 10%.
E - this twists what we are told. We are told that only 4% of all self-employed are minorities, but 17% of the population are minorities... don't get it twisted. Incorrect

Q2 - Detail 
 What are we told the 1970 funding focused on?
p2 describes the 197- funding - essentially focused on bringing up # minority owned businesses

A - No - not
B - this is correct. Ownership gap is what we are targeting. What ownership gap? The gap in ownership mentioned above... 4% ownership.
C - this was the goal of the late 1970s, not 1970 itself. Incorrect
D - No. This was a former goal. Incorrect.
E - No. They were targeting minority-owned businesses in general.

Q3 - Function/ Purpose   
The second passage really just recalls the next step taken and the shift in focus of the SBA to alleviating gaps in the number of minority owned businesses.
A - It doesn't really narrow the scope. It does talk more specifically about the topic, but there is a shift in scope to the change that occured.
B - At the end of p1 we are told "the answer to the fundamental question of who the recipients should be ..has changed". P2 then goes on to discuss who those recipients should be- minority owners/ self-employed. So B is correct.
C - incorrect. I don't know if this is the most 'striking instance', but I doubt it.
D - Incorrect. Completely off the mark.
E - Its not really a result - a type of change in policy is discussed. Incorrect

Q4 - Detail   
Administering minority business funding is discussed in P1 and then throughout here and there.

We are told "the fundamental question of who the recipients should be" in p1 though, so that's D straight away.

A is incorrect - nowhere discussed. We are just told that the funding is federally supplemented.
B is incorrect because we are told this is more elaborate decision made down the track... what's more basic? B or D?
C No - the growth potential of small-minority ownd businesses is considered in the late 1970s, but nowhere is profit mentioned.
E - This is a question posed in the 1970s reforms - not so basic though.

Q5 - Main Idea 
 B is incorrect - is congress even mentioned?
C is incorrect - where are multiple sources mentioned let alone contrasted?
D is incorrect - no misconception is mentioned. Historical changes are traced.
E is incorrect - nothing is really advocated, let alone an alternate approach

Thus A is correct.

abhola · Answer

Hi  GMATNinja

Can I interpret the above explanation as follows:

In the battle of D vs E:

E is wrong because E is not the most basic consideration.
Knowing what firms are likely to succeed comes AFTER once you have decided who the funding recipients should be (option D).

I choice E because, simply, D looked too simple to be true  :')

Any suggestions on how should I control this urge?

Thank you!

GMATNinja · Answer

Question 4 For RC questions that ask about specific details in the passage, it's best to find the most relevant piece of the passage first and then answer the question with the exact language of the passage in mind. Question 4 asks which answer choice is mentioned as a "basic consideration" in administering minority-business funding programs. As we pointed out in our earlier explanation, the most relevant portion of the passage to answer this question is at the end of the first paragraph, where we learn that a "fundamental question" is "who the recipients should be." With that context in mind, (D) is clearly mentioned as a basic consideration, while (E) is not. Is (D) too simple to be true? Not at all! The way to resist this kind of thinking is to realize that the people who write the test are not trying to trick you. If they ask for a detail mentioned in the passage, go find that detail and answer the question accordingly. That's not to say that RC questions can't be hard. Sometimes details are difficult to parse, or the language is very convoluted, or they ask for a nuanced inference. But the questions are asked in good faith, so all you can do is hone and refine your process to give yourself the best shot at answering questions accurately. There's no need to make your life harder by worrying that an answer choice is too simple to be true.

I hope that helps!

krndatta · Answer

bm2201 ,  GMATNinja

Can you please explain Q-1 in detail? 
How cannot A be not an answer? 
Confused with A.

Thanks

GMATNinja · Answer

Question 1 
 
The "ownership gap" mentioned in the passage shows that minorities make up 17% of the population, but only 4% of the nation's self-employed. To close this gap, we'd need more minority-owned small businesses.

Would (A) close the gap?
 
There are a couple of issues with (A). First, we don't actually know what percentage of government contracts are  currently  awarded to minority entrepreneurs -- it could be true that these entrepreneurs  already  receive an equal percentage of these contracts. After all, government contracts are only one category of small business. So it's possible that these are already equal, and yet the ownership gap described in the passage remains.

Additionally, notice that (A) talks about the percentage of  contracts  awarded, NOT the number of  businesses  to which they are awarded.

We can't assume that these contracts would be parceled out to a large number of minority-owned businesses -- it could also be true that a small number of minority entrepreneurs are awarded the contracts. That wouldn't help close the ownership gap. Instead, it would just make a couple of entrepreneurs even more successful.

For those reasons, you can get rid of (A) for question 1.

I hope that helps!

The United States government has a long-standing policy of using

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GMAT Reading Comprehension (RC) Questions

The United States government has a long-standing policy of using

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