Verbal Diagnostic Test No : 6 – CR Q No: 2

dina98

The Central Bank’s arguments hinge on one single factor that containment of money supply and thereby inflation is the means of achieving prosperity. This is a debatable point. There are other ways through which growth can be spurred. For example, Roosevelt proved in the 1930’s when the country was going through the Great depression that by massive development, one can stoke growth. The ignoring of other viable alternative causes is what weakens the Central Bank’s narrow perspective relative to money supply.

It must be noted that the issue is about interest rate maneuvers in general and not about exclusive reference to either increases or decreases in rate. While lowering the rate may aid an already flourishing economy, it may not assist that much a dented economy. That is the reason many developing nations have to create wealth through growth, even at the risk of some inflation.

D is silent on the core issue of bailing out a weak economy; it is just scratching the surface of problem, akin to treating the symptoms of a disease rather than the cause of the disease by admitting that the effect is temporary.

May be this is a bit of discourse on Economics, though essential to deal with critical reasoning. This was my perception honestly when I formatted the answer choices