In the Wealth of Nations (1776), Scottish economist Adam Smith...

Question

In the wealth of nations (1776), Scottish economist Adam Smith asserted that the propensity of “ truck, barter and exchange ” was both the foundation of commerce and a given quality of human nature, driven by individual desire. Smith’s view that self-interest dominated the business that emerged in early modern (sixteenth- and seventeenth century) England has had tremendous effects on how such relations have been perceived. Today it is typically assumed, for instance, that the development of business relations weakened the spirit of cooperation that characterized village communities and encouraged a spirit of individualism and self-betterment that ran counter to community interest.

However, such a view fails to account for the language that people in early modern England used to articulate their understanding of business relations, language that stressed credit, trust, obligations, and contracts, rather than self-interest. Throughout this period, most business transactions were conducted on credit—of plain dealing and of the keeping of promises —dominated the way in which business relations were conceived. Individual profit and solvency were important, but neither could be achieved without the trust and direct cooperation of one’s neighbours. As a result, buying and selling, far from breaking up communities, actually created numerous bonds that held villages together.   1 
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C 
 The author of the passage refers to “truck, barter and exchange” in the highlighted text most likely in order to

(A) lend authority to the argument that commerce is characterized by self-interest
(B) identify activities that embody essential qualities of human relationships
(C) indicate the terms Adam Smith used to define business relations
(D) represent the everyday speech used in village communities in England
(E) introduces key terms used in credit transactions in early England

2 
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E 
 It can be inferred that the author of the passage believes that economic historians whose views have been influenced by Adam Smith have failed to examine which of the following?

(A) The power of business relations to shape moral values and beliefs
(B) The significance of human nature in shaping economic developments and social structure
(C) The importance of village communities in determining the economic well-being of larger society
(D) The consequence of individual communities of changes in a country’s economic structure
(E) The actual language used by people in village communities to refer to their business dealings

3 
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D 
 The passage is primarily concerned with which of the following?

(A) Criticizing a theory of human nature
(B) Evaluating the impact of a particular economist on modern theories of economic history
(C) Chronicling the early history of the use of credit in business relations
(D) Reconsidering accepted ideas about the history of business relations
(E) Explaining the decline of cooperation in village communities

GMATNinja · Accepted Answer

Q2: A closer look at who's concerned with "human nature" In the second paragraph, the author never claims that credit, promisees, and trust are part of human nature. Instead, the author focuses explicitly on the language that people in early modern England used when doing business. The author points to this use of language as something that the typical view (which does depend on a Smith-like view of human nature) fails to consider: I hope this clarifies why we eliminate (B). Choice (E) is much better supported by the passage, and directly answers the question that we're being asked: What have these economic historians failed to examine? Q3: Why did the author write this passage? You've got a good grasp of the passage! When we want to state the primary concern of a passage, we're basically asking, "Why, overall, did the author write this thing?" Breaking it down once more: The author wrote paragraph 1 to present today's typical view of what the development of business relations did to village communities (and to tell us that that view is informed by Smith's work). The author wrote paragraph 2 to explain how today's typical view has failed to take into account language used in these village communities. So the author wrote this passage to raise doubts about how business relations during early modern England are perceived today. Note that the main concern here is not Adam Smith. It's the conventional wisdom that his work helped to create. Let's be careful here. Yes, the author is evaluating modern views of business relations during early modern England. However, what does answer choice (B) say? "Evaluating modern views" is not the same as "Evaluating the impact of a particular economist." The author mentions Smith to help us understand the modern view, but as a whole this passage evaluates the view of early modern England's business relations and how we come to believe it -- not Smith's impact on modern theories. As explained earlier, that's why we eliminate (B). I'm not quite sure what you mean by this hypothetical statement. To stick with the passage as it's written, the author is telling us that today's typical view fails to account for important information that could change our understanding of business relations in early modern England. The passage pushes us to question this view and consider a different interpretation of business relations. This closely matches our understanding of why the author wrote this passage, and that's why (D) is the best answer choice as it's written. Q1: The Question is "Why?" As usual, when I'm asked for help with a specific question type, I don't have a very satisfying answer.

The key to RC is how well you read the passage: if you do a bulletproof job of reading for structure and purpose, then it will become easier to see how a specific detail fits in with the purpose of a paragraph or with the overall purpose of the passage. (More on these general ideas here .) At the end of the day, this kind of question basically asks, "Why does the author mention this detail?" This is very different from asking questions like: "Does the author mention this detail?" "Do you see this detail in the passage?" "Would the author agree with this detail?" This distinction may seem obvious, but in practice it can be tough to stay focused on the author's purpose , especially when you're under time pressure. If you're only looking for details that seem like they were in the passage, or kind of fit with things the author might say, then you'll have a very hard time eliminating wrong answer choices. So always remember that you're looking for the answer choice that best explains why the author has brought up the detail in this exact part of the passage. I hope this all helps!

GMATNinja · Answer

The passage suggests that historians influenced by Adam Smith believe that the development of business relations  weakened the spirit of cooperation  that characterized village communities, but it does not suggest that those historians failed to examine the IMPORTANCE of those village communities in determining the economic well being of a larger society. That's why (C) doesn't work.

Choice (E) is not a trick answer (and in general, dismissing anything as a "trick answer" or "trick question" is very unlikely to help you develop a deeper understanding of the GMAT). The first sentence of the second paragraph tells us that those historians failed to account for the language that people in early modern England used to articulate (i.e. communicate) their understanding of business relations. We can infer that the actual language used by people in the villages to refer to their business dealings would be encompassed by this general statement about the language. Thus, choice (E) is the best answer.

I hope this helps!

GMATNinja · Answer

Passage breakdown 
In the first paragraph (P1), the author:

Explains Adam Smith's assertion : that "self-interest dominated the business that emerged in early modern England." 
  Describes a "typical" view based off of this assertion : that business relations eroded cooperation in villages.

In the second paragraph, the author:

Critiques the "typical" view from P1   
 Concludes that the development of business relations actually  created  bonds that held villages together.

For more on the process of breaking down RC passages, check out  this article  and  our live RC videos .

Explanations for individual questions 
 
 Question 1
 
  Part 1  
  Part 2   
 
 Question 2
 
  Part 1  
  Part 2  
  Part 3  
  Part 4   
 
 Question 3
 
  Part 1  
  Part 2

CrackverbalGMAT · Answer

let us read the passage - 
sentence 1 talks about Adam Smith's assertion that propensity to truck, barter and trade was foundation of commerce and driven by human desire. The 2nd sentence expands on the first by stating that Smith's views have had tremendous impact on how business relations have been perceived.
the 3rd sentence explains the impact - it is typically assumed that business relations discouraged cooperation. 
Note the usage of the word 'typically'. It is an indication that the author will disagree with the statement.

Para 2 - Note the usage of the word 'however'. the author disagrees with the last statement in paragraph 1. the rest of the paragraph then expands on this.

The last sentence -  'As a result, buying and selling, far from breaking up communities actually created numerous bonds that held villages together'  - is the conclusion.

Question 3.
A - there is no mention of any 'theory of human nature'. the passage criticizes some 'assumptions held on the impact of the development of business relations'.
B - there is no mention of 'modern theories of economic history'.
C - there is no timeline/chronicle. Also, the main idea of the passage is not about the history of the use of credit in business transactions.
D - correct answer. "accepted ideas" = "typically assumed".
E - the second paragraph states exactly the opposite.

Question 1
Let us read the first two sentences.
A - "lend authority to the argument" - the author does not mention any argument besides that of Smith. Nor is the first sentence supporting any argument.
B - no mention of "human relationships". the passage states that the highlighted text is a given quality of human nature.
the passage does not talk about "essential qualities" only about  A  "given nature"
C - correct answer.
D - "everyday speech" is not mentioned in the first paragraph.
E - Not mentioned in the first paragraph.

Question 2
"however, such a view fails to account for the language that people in early england used to articulate their understanding of business relations".
Only E talks about this.

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KGump · Answer

@Gmatninja, Experts,

Could you please help me decode the answer to question 2.

Why is C incorrect ?

and why is E correct ?
Is E a DOUBLE TRICK answer choice as when i read it i could trace it back to the 1st line of para 2 but i thought that its not referring to the "language used" in literal sense and in figurative sense.

Waiting eagerly for your reply !

gmatdemolisher1234 · Answer

GMATNinja

Thanks for ur explanation!! I am having a problem marking off A.

End of first paragraph states that " development of business relations has caused has weakened the spirit of cooperation......counter to community interest ".

Taking this into consideration the author mentions his views and in the second paragraph (second line) states that "most business transactions were .........villages together".

Do these lines not account for option A.

Could u please give ur perspective on this.

Thanks.

GMATNinja · Answer

This post refers to question #2...

The passage does not suggest that those historians failed to consider the  power  of business relations to shape moral values and beliefs. In fact, the last sentence of the first paragraph demonstrates that those historians felt that business relations had the power to weaken the spirit of cooperation and encourage of individualism.

In other words, the author and those historians would disagree about  how  business relations shaped moral values and beliefs but not about  whether  business relations have the power to shape a moral values and beliefs.

As described in  this post , choice (E) is a better answer.

I hope that helps

GMATNinja · Answer

Question 3

The passage is primarily concerned with which of the following?

According to Adam Smith, the "truck, barter, and exchange" system was a product of human self-interest. Although the author criticizes this view, the author is not trying to say anything about human nature in general. Maybe people  are  self-interested in general. Regardless, the author is only concerned with whether the BUSINESS RELATIONS of that time were dominated by self-interest. in other words, the author is primarily concerned with the business relations, not human nature itself. Eliminate (A).

The author does mention that Smith's view "has had tremendous effects on how such relations have been perceived." However, is the author's primary intention to examine  how  Smith's views impacted modern theories of economic history? In other words, is the author trying to answer the question, "How has Adam Smith impacted modern theories of economic history?" Not quite... instead, the author wants us to see how Smith's views have led to misinterpretations. The author is basically saying, "Hey, we've been basing our interpretations of history on Smith's views, but what if those views aren't entirely accurate?" Choice (B) doesn't quite cut it.

The passage mentions the use of credit in business relations, but the passage is NOT primarily concerned with describing the early  history  of credit in business relations. Eliminate (C).

As explained for choice (B), most interpretations of the business relations of that time have been significantly influenced by Smith's commonly-accepted views. The author wants us to question Smith's views and thus reexamine the interpretations that were based on those commonly-held ideas. This fits with choice (D).

The author does criticize the view that buying and selling disrupted cooperation in village communities, but the author does not attempt to explain the decline of that cooperation. Eliminate (E).

(D) is the best answer.

yousefalj · Answer

I always shoot myself in the foot by over-thinking on RC. Although I managed a 51/51 on critical reasoning and 44/51 on SC, a 23/51 on RC destroyed my verbal score on the real GMAT - ended up getting a 35 on verbal despite scoring high on the other sections.

That being said, question 2 is a good example of silly mistakes I make and I was hoping for some clarification.

It is stated on numerous platforms that inference questions will never restate the answer but rather paraphrase it. Thus I never expected E to be correct because it basically restates the point almost word for word. This is the only reason I went for A. I assumed that since historians ignored the actual language used in business dealings (language that promoted trust rather than self interest) and thus the impact such language had on business dealings, said historians are not crediting the impact business had on moral values and beliefs.

RC is truly frustrating me because it is the only obstacle preventing me from achieving a 700+ and these stupid mistakes stemming from overthinking constantly brings my score down.

Anyways, point of this post is to understand how the correct inference answer is almost an exact restatement from the passage. Thanks in advance.

GMATNinja · Answer

So this might sound silly, but it's actually a really common problem on CR and RC: what, exactly, does the word "inference" or "infer" really mean? By definition, an inference is something that's NOT stated directly in the passage. But if you think about that definition really strictly and literally, it leaves tons of wiggle-room. Sure, sometimes a correct inference is several steps removed from the passage, and maybe you have to walk through several logical steps to go from the EXACT language of the passage to the correct inference. Maybe you had to work pretty hard to draw a conclusion from the facts given, and that conclusion could qualify as an "inference." But sometimes, an inference can be a fairly simple restatement of something given in the passage. Sometimes, that inference is so obvious that it seems really, really stupid. But as long as the language is slightly different, it qualifies as an inference, and not something that was directly stated. Consider the following: Passage: Charlie has a gigantic appetite. He enthusiastically eats at least eight sizable meals a day, and spends most of his waking hours eating, cooking, thinking about food, or making friends with chefs. Inference: Charlie eats large quantities of food. Pretty dumb, right? Of course Charlie eats large quantities of food -- he eats at least eight sizable meals a day, and has a gigantic appetite. But the phrase "Charlie eats large quantities of food" wasn't directly stated. This can count as an inference, as dumb as that may sound. So here's the right way to approach inference questions: find the four answer choices that are LEAST supported by the passage. The remaining answer choice will be correct by default, regardless of whether it's a simple, silly restatement of something in the passage -- or a more involved conclusion that you derived only after several long, sweaty minutes of heavy thinking. (For whatever it's worth, this general approach might sound familiar if you've read our beginner's guides to RC or CR .) So don't overthink the inferences, and you'll be fine.

I hope this helps!

GMATNinja · Answer

Question 1

As always, use POE:

Do these words suggest anything about self-interest? No. They are simply words to describe commerce in early modern England. Eliminate (A).

The passage does not discuss qualities that are essential (necessary) to human relationships. The passage talks about trust and cooperation, which are arguably essential qualities of human relationships, but "truck, barter, and exchange" would not be considered activities that EMBODY such qualities. Eliminate (B).

"Smith’s view that self-interest dominated the business that emerged in early modern England has had tremendous effects on how  such relations  have been perceived." - This sentence is talking about the perception of the business relations of that time. What business relations? The ones driven by self-interest. The preceding sentence tells us that "truck, barter, and exchange" (t/b/e) were characterized by individual desire (i.e. self interest). So Smith is simply using those terms to define the business relations characterized by self-interest and individual desire. (C) is admittedly confusing, but it matches the first two sentences of the passage. Hang on to this one.

We don't know whether people in English village communities used these terms in everyday speech, so eliminate (D).

There is no mention of credit transactions in the first paragraph. According to Smith, t/b/e were characterized by self-interest. On the other hand, conducting business transactions on credit requires trust and cooperation. So when Smith talked about t/b/e, he was not linking those activities to credit transactions. Eliminate (E).

(C) is the best answer.

aviejay · Answer

Hi  GMATNinja

I marked option Bas the correct answer for question3 and got it wrong

My reasoning was, in the the first paragraph, the author says "Today it is typically assumed, for instance, that the development of business relations weakened the spirit of cooperation that characterized village communities and encouraged a spirit of individualism and self-betterment that ran counter to community interest.". This is a modern assumption (can also be taken as a modern theory) and this comes after the author says "Smith’s view that self-interest dominated the business that emerged in early modern (sixteenth- and seventeenth century) England has had tremendous effects on how such relations have been perceived. " So, we can see that Smith definitely had an impact of modern theories.

From here, we move on to the secong paragraph in which the author starts with "However, such a view fails to account for the language that people in early modern England..." and goes on to explain "why does the view fail". So, he is definitely evaluating the modern views which goes with option B.

The only way that I see this evaluation could be bettered is if "such a view fails to account for the language that people in early modern England" is placed at the end of the 2nd paragraph. Otherwise, option B shouldhave been the correct choice.

Option D would have been correct if "such a view fails to account for the language that people in early modern England" would not have been mentioned. The author passes his own judgement and this should be seen as evaluating.

Please explain where am I going wrong.

Please explain where am I going wrong.

sdlife · Answer

Hi  CrackVerbalGMAT  /  GMATNinja  / Other Experts,

Thank you for the great explanations for this question. Very helpful. I usually get the questions - "the author mentions XXX in line YY in order to" - wrong in RC. This is one of the question type that I am not able to improve on. Can you please advise on how to attack these question types? I would really appreciate it.

Thank you!

SD

hassu13 · Answer

GMATNinja  I understand that for Q#2 option E is a restatement and hence is correct. But How can B not be correct. The author has emphasised in second para that it is because of the human nature- ie on basis of giving credit or promises- that the business flourished. it becomes quite obvious that the economic historians didnt consider this aspect. Can you pl correct me.

ovrup007 · Answer

Hi  GMATNinja ,

Thanks for the explanation. I am a bit confused with the term "accepted ideas". Author has presented a theory and then criticized it for not taking into account the language used in early business dealings. But how do we know that the ideas were "accepted".

GMATNinja · Answer

The passage itself communicates that these ideas have been accepted:

Smith’s view that self-interest dominated the business that emerged in early modern (sixteenth- and seventeenth century) England  has had tremendous effects on how such relations have been perceived. Today it is typically assumed, for instance , that the development of business relations weakened the spirit of cooperation that characterized village communities and encouraged a spirit of individualism and self-betterment that ran counter to community interest.

Here, the author tells us that the effects of Smiths' view have been so great that today's typical assumptions line up with Smith's 18th-century ideas concerning commerce and individual desire. In other words, Smith's ideas from 1776 have been accepted to the point that they're part of typical assumptions at present day.

I hope this helps to clarify!

shanks2020 · Answer

Hi  GMATNinja   CrackVerbal

In question 2, the passage talks about the language used in modern England. This may or may not be in vaiilage.
However, the option E talks about the language specifically used in village communities. So how can this be correct?

GMATNinja · Answer

The start of the second paragraph tells us about the a gap in Smith's views:

However, such a view fails to account for the language that people in early modern England used to articulate their understanding of business relations

You're correct that this talks about the language used across the whole of early modern England. However, given that this language was used across  all  of early modern England, it would be reasonable to assume this language would be used in a village  inside  early modern England.

If the roles were reversed, you would  not  be able to make this shift. We could  not  say that language used in one village was used across the country, but we  can  say that language used across the country was used in villagess.

There is another clue at the end of the second paragraph:

As a result, buying and selling, far from breaking up communities, actually created numerous bonds that held villages together.

The business transactions that relied on the use of language mentioned earlier in the paragraph  "created numerous bonds that held  villages  together."  This suggests that this language was being used in the villages of early modern England.

This gives enough justification to say that the use of  "village communities"  in (E) is ok.

I hope that helps!

Rickooreo · Answer

GMATNinja   CrackverbalGMAT  : Doubt in GMATprep RC

Can you please help me with one perspective I have of Q#1

The author of the passage refers to “truck, barter and exchange” in the highlighted text most likely in order to
(A) lend authority to the  argument  that commerce is characterized by self-interest

In the wealth of nations (1776), Scottish economist Adam Smith asserted that the propensity of “truck, barter and exchange” was both the foundation of commerce and a given quality of human nature, driven by individual desire.

My approach : The intent of the whole para is to say transactions are not motivated by self-interest in village communities as believed.

To say "they are not motivated by self-interest", we first need to show they are motivated by it and thats the sole reason of mentioning Adam Smith's quote, had the intent of the passage been something else Adam Smith's quote would not have been relevant and hence the big picture purpose of the quote is support that commerce is characterized by self-interest

Can you please help me know where I went wrong.

In the Wealth of Nations (1776), Scottish economist Adam Smith...

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GMAT Reading Comprehension (RC) Questions

In the Wealth of Nations (1776), Scottish economist Adam Smith...

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