As the economic role of multinational, global corporations expands

Question

As the economic role of multinational, global corporations expands, the international economic environment will be shaped increasingly not by governments or international institutions, but by the interaction between governments and global corporations, especially in the United States, Europe, and Japan. A significant factor in this shifting world economy is the trend toward regional trading blocs of nations, which has a potentially large effect on the evolution of the world trading system. Two examples of this trend are the United States-Canada Free Trade Agreement (FTA) and Europe 1992, the move by the European Community (EC) to dismantle impediments to the free flow of goods, services, capital, and labor among member states by the end of 1992. However, although numerous political and economic factors were operative in launching the move to integrate the EC’s markets, concern about protectionism within the EC does not appear to have been a major consideration. This is in sharp contrast to the FTA; the overwhelming reason for that bilateral initiative was fear of increasing United States protectionism. Nonetheless, although markedly different in origin and nature, both regional developments are highly significant in that they will foster integration in the two largest and richest markets of the world, as well as provoke questions about the future direction of the world trading system.   1 
 1. The primary purpose of the passage as a whole is to

(A) describe an initiative and propose its continuance
(B) chronicle a development and illustrate its inconsistencies
(C) identify a trend and suggest its importance
(D) summarize a process and question its significance
(E) report a phenomenon and outline its probable future

2 
 2. According to the passage, all of the following are elements of the shifting world economy EXCEPT

(A) an alteration in the role played by governments
(B) an increase in interaction between national governments and international regulatory institutions
(C) an increase in the formation of multinational trading alliances
(D) an increase in integration in the two richest markets of the world
(E) a fear of increasing United States protectionism

3 
 3. The passage suggests which of the following about global corporations?

(A) Their continued growth depends on the existence of a fully integrated international market.
(B) Their potential effect on the world market is a matter of ongoing concern to international institutions.
(C) They will have to assume quasi-governmental functions if current economic trends continue.
(D) They have provided a model of economic success for regional trading blocs.
(E) Their influence on world economics will continue to increase.

4 
 4. According to the passage, one similarity between the FTA and Europe 1992 is that they both

(A) overcame concerns about the role of politics in the shifting world economy
(B) originated out of concern over unfair trade practices by other nations
(C) exemplify a trend toward regionalization of commercial markets
(D) place the economic needs of the trading bloc ahead of those of the member nations
(E) help to ensure the continued economic viability of the world community

5 
 5. Which of the following can be inferred from the passage about the European Community prior to the adoption of the Europe 1992 program?

(A) There were restrictions on commerce between the member nations.
(B) The economic policies of the member nations focused on global trading issues.
(C) There were few impediments to trade between the member nations and the United States.
(D) The flow of goods between the member nations and Canada was insignificant.
(E) Relations between multinational corporations and the governments of the member nations were strained.

6 
 6. The author discusses the FTA and Europe 1992 most likely in order to

(A) point out the similarities between two seemingly disparate trading alliances
(B) illustrate how different economic motivations produce different types of trading blocs
(C) provide contrasting examples of a trend that is influencing the world economy
(D) identify the most important characteristics of successful economic integration
(E) trace the history of regional trading blocs

7 
 7. Which of the following best describes the organization of the passage?

(A) An argument is put forth and evidence for and against it given.
(B) An assertion is made and opposing evidence presented.
(C) Two hypotheses are described and shown to inconsistent with one another.
(D) A phenomenon is identified and illustrations of this phenomenon offered.
(E) A specific case of a phenomenon is discussed a generalization drawn.

sameerdrana · Accepted Answer

1. The primary purpose of the passage as a whole is to
(C) identify a trend and suggest its importance
   Regional trading blocks are emphasized upon. The continuing trend is concluded as being significant in the future scheme of things. 
2. According to the passage, all of the following are elements of the shifting world economy EXCEPT
(B) an increase in interaction between national governments and international regulatory institutions
 The new order mentions about "the international economic environment will be shaped increasingly   not  by governments or international institutions , but by the interaction between  governments and global corporations " 
Clearly international regulatory institutions are not involved in the new order.
 
3. The passage suggests which of the following about global corporations?
(E) Their influence on world economics will continue to increase.
  Global corporations' influence  'increasingly' .  is the key

4. According to the passage, one similarity between the FTA and Europe 1992 is that they both
(C) exemplify a trend toward regionalization of commercial markets
 Although their origins are due to vastly differing reasons, the passage clearly builds a strong case for 'regionalization' being the mantra for success of commercial markets.

5. Which of the following can be inferred from the passage about the European Community prior to the adoption of the Europe 1992 program?
(A) There were restrictions on commerce between the member nations.
 the move by the European Community (EC)  to dismantle impediments  to the free flow of goods, services, capital, and labor among member states by the end of 1992' suggests previously existing restrictions

6. The author discusses the FTA and Europe 1992 most likely in order to
(C) provide contrasting examples of a trend that is influencing the world economy
 Origins of both have been contrasted but resulting trend is common and is influencing the world economy, evident from the last sentence of the passage.

7. Which of the following best describes the organization of the passage?
(D) A phenomenon is identified and illustrations of this phenomenon offered.

mSKR · Answer

Summary of Paragraph:

As global corporations expands , economic will be affected by interaction between government and global corporations . 
Reason: trend towards regional trading blocks of nations 
2 examples: FTA and Europe1992 
 Even Both examples have contrast , both shows integration in these regional blocks 
Question: future direction of world trading system

(A) describe an initiative and propose its continuance
Not propose: but provoking questions
(B) chronicle a development and illustrate its inconsistencies
No inconsistencies are mentioned 
 (C) identify a trend and suggest its importance
Correct: effect on world trading system  
(D) summarize a process and question its significance
Question is not on its significance
(E) report a phenomenon and outline its probable future
Future is not outlined.

(A) an alteration in the role played by governments
Yes, government plays a role by interacting with global corporations 
 (B) an increase in interaction between national governments and international regulatory institutions 
will be shaped increasingly not by governments or international institution
So clearly interactions between them were not involved
(C) an increase in the formation of multinational trading alliances
Europe1992 is an example
(D) an increase in integration in the two richest markets of the world
interaction in USA , Europe and Japan markets can influence the world trade
(E) a fear of increasing United States protectionism
A fear that’s why local blocks were built and hence FTA came into picture

As the economic role of multinational, global corporations expands, the international economic environment will be shaped increasingly not by governments or international institutions, but by the interaction between governments and global corporations,

Passage talks about global corporations:
As economic roles of thee corporations expands, international economic environment will be shaped increasing by interaction

(A) Their continued growth depends on the existence of a fully integrated international market.
As these corporations expands , integration will be influenced. Reverse is not mentioned. Hence cant not be correct
(B) Their potential effect on the world market is a matter of ongoing concern to international institutions.
Concern to international institutions are not discussed.
(C) They will have to assume quasi-governmental functions if current economic trends continue.
Opposite of this is mentioned, As they expand , government will get influenced to interact with these global interactions, so it means their functionality will be changed but not going to remain as same
(D) They have provided a model of economic success for regional trading blocs.
These model were economic success or not have not been talked
 (E) Their influence on world economics will continue to increase.
Exactly, as they expand their influence will be expanded.

(A) overcame concerns about the role of politics in the shifting world economy
Not mentioned
(B) originated out of concern over unfair trade practices by other nations
Not mentioned
 (C) exemplify a trend toward regionalization of commercial markets
Yes as mentioned in our summary 
(D) place the economic needs of the trading bloc ahead of those of the member nations
Not mentioned
(E) help to ensure the continued economic viability of the world community
 Not mentioned as such

dismantle impediments to the free flow of goods, services, capital, and labor among member states by the end of 1992.

(A) There were restrictions on commerce between the member nations.
Correct as mentioned from the lines  
(B) The economic policies of the member nations focused on global trading issues.
Not mentioned
(C) There were few impediments to trade between the member nations and the United States.
No, not between members nations and US
(D) The flow of goods between the member nations and Canada was insignificant.
irrelevant
(E) Relations between multinational corporations and the governments of the member nations were strained.
Not mentioned

. A significant factor in this shifting world economy is the trend toward regional trading blocs of nations, which has a potentially large effect on the evolution of the world trading system. Two examples of this trend are the United States-Canada Free Tra

Why author discussed about these 2 examples? He wants to bring into notice a factor in shifting world economy with these 2 examples.

(A) point out the similarities between two seemingly disparate trading alliances
Yes point out similarities between these 2 examples but why the author talks about FTA and Europe 1992 at first place because he wants to mentione with these 2 examples.
Hence true but not correct
(B) illustrate how different economic motivations produce different types of trading blocs
Motivation is same; 
 (C) provide contrasting examples of a trend that is influencing the world economy
For a moment remove contrasting .we read provide examples of a trend. 
These examples happen to be contradictory.
I don’t have further argument to reject this option.
Seems correct 
(D) identify the most important characteristics of successful economic integration
We only know that it will foster integration but we don’t know about important characteristic of this integraiton
(E) trace the history of regional trading blocs
not mentioned

(A) An argument is put forth and evidence for and against it given.
No evidence against is given
(B) An assertion is made and opposing evidence presented.
No opposing evidence
(C) Two hypotheses are described and shown to inconsistent with one another.
No inconsistency
 (D) A phenomenon is identified and illustrations of this phenomenon offered.
Correct: phenomena of foster interaction  
(E) A specific case of a phenomenon is discussed a generalization drawn.
Not a specific case but 2 examples

ag28 · Answer

GMATNinja   Sajjad1994   egmat   VeritasKarishma 
For Q6 I selected option A considering the bigger motive of the author is to show the similarities
Please help

GMATNinja · Answer

Question 6  
 
As with any RC passage, it's essential to read for the author's purpose, and be clear about the structure of the passage. Let's start by doing that.

In this passage, the author's purpose is to:
  Argue that the international, economic environment will be increasingly shaped by the interaction between governments and global corporations  Argue that trading blocks of nations are playing a key role in this trend

Now that we have a grasp of the author's purpose, we can see that the FTA and the EC are mentioned as "two examples of this trend." We then learn that although both agreements "foster integration," they do so for different reasons. The author draws a "sharp contrast," since the FTA was concerned about protectionism, whereas the EC was not.

Let's take a look at the answers.

It's true the trading alliances have similarities, but according to our analysis, this is not  why  the author mentions the FTA and Europe. As we saw, they are mentioned as examples of a larger  trend . On top of that, the author draws a  sharp contrast  between them. So (A) is out.

As we saw, the FTA and Europe were mentioned to provide  examples of a trend , so this makes sense. The passage also mentions the  sharp contrast  between these trading alliances. So (C) is correct.

I hope that helps!

thakurarun85 · Answer

What's wrong with option B.

GMATNinja · Answer

Question 6 
 
To see why (B) is wrong, let's revisit the question itself:

The phrase "in order to" tells us we are looking for an explanation of WHY the author discusses the FTA and Europe 1992. In other words, the correct answer should explain how the discussion of the FTA and Europe 1992 is related to the author's overall purpose.

Let's consider (B):

It's true the two trading blocs were driven by different economic motivations. More specifically, the FTA was motivated by fears of protectionism, while Europe 1992 wasn't. But is that WHY the author mentioned these trading blocs -- to illustrate how these different motivations produced "different types of trading blocs?"

Recall that the author's main purpose was to argue that "the international, economic environment will be increasingly shaped by the interaction between governments and global corporations." The blocs are mentioned as examples of a trend that is supporting this larger shift.

Since (B) doesn't capture this purpose, it doesn't tell us WHY the author mentioned the FTA and Europe 1992. Based on that alone, we can eliminate (B).

On top of that, if we examine (B) more closely, there's another good reason to get rid of it.

Does the author actually "illustrate" how the different economic motivations led to "different types of trading blocs?" In other words, does the author explain how the different motivations  produced  differences between the two trading blocs? Going back to the passage, we see the author never makes this connection. Although the different motivations are mentioned, these motivations are not tied to differences between the two trading blocs. In fact, despite noting the differing motivations for the two trading blocks, the author stresses how they play a similar role in the world economy.

So in contrast to (B), the author doesn't argue that the different motivations led to "different types of trading blocs." Rather, the author argues that  despite  their different motivations, the trading blocs play similar roles in the world economy. So in addition to failing to address the author's purpose, (B) is inconsistent with the passage's discussion of trading blocs, and we can eliminate it.

I hope that helps!

HWPO · Answer

In question 7, why is the answer D and not E? Very close options... any advice please?

Thanks !

7. Which of the following best describes the organization of the passage?

(A) An argument is put forth and evidence for and against it given.
(B) An assertion is made and opposing evidence presented.
(C) Two hypotheses are described and shown to inconsistent with one another.
(D) A phenomenon is identified and illustrations of this phenomenon offered.
(E) A specific case of a phenomenon is discussed a generalization drawn.

GMATNinja · Answer

Question 7 
 
In this passage, the author first identifies a trend. Then, he/she provides two examples of that trend (the FTA and the EC). So, which answer choice best captures the organization of the passage?

Here's (E):
 
The main reason to get rid of (E) is that the passage discusses  two  specific cases, not just one specific case. Additionally, the author doesn't just leap into those examples -- instead, he/she starts by discussing a shift in the market, and then gives us some examples.

Compare that to (D):
 
This fits better! The author starts off by identifying a shift, and then provides two examples of that shift.

(D) is the correct answer to question 7.

Rickooreo · Answer

GMATNinja   egmat   KarishmaB

Can you please help me understand how to evaluate options for Q3 and Q4

3. The passage suggests which of the following about global corporations?

(A) Their continued growth depends on the existence of a fully integrated international market.>> Correct if government and private institutions don't interact, there will be no regional bloc and hence selected A.
(B) Their potential effect on the world market is a matter of  ongoing concern  to international institutions.>> bold part not mentioned in passage - Eliminate
(C) They will have to assume quasi-governmental functions if current economic trends continue>> Unable to come up with good reason since if global corporations are participating in decision making with government they are assuming quasi-governmental functions and more expansion of such global operation they more they will have to assume quasi-governmental functions 
(D) They have  provided a model  of economic success for regional trading blocs. >> bold part not mentioned in passage - Eliminate
(E) Their influence on world economics  will continue to increase  >> no such surety "of increase" is mentioned in the passage.  Eliminate

4. According to the passage, one similarity between the FTA and Europe 1992 is that they both

(A)  overcame concerns  about the role of politics in the shifting world economy
(B)  originated out of concern  over  unfair trade practices  by other nations
(C) exemplify a trend toward  regionalization  of commercial markets - 
Dictionary meaning : Regionalization is the tendency to form decentralized regions
There is some ambiguity. Basis definition it can also mean dividing each region, however passage intends regions becoming one bloc

(D) place the economic needs of the trading bloc ahead of those of the member nations -  Unable to eliminate 
(E) help to ensure the continued economic viability of the world community -  Unable to eliminate

Rickooreo · Answer

Can you please help me understand how to evaluate options for Q3 and Q4

3. The passage suggests which of the following about global corporations?

(A) Their continued growth depends on the existence of a fully integrated international market.>> Correct if government and private institutions don't interact, there will be no regional bloc and hence selected A.
(B) Their potential effect on the world market is a matter of ongoing concern to international institutions.>> bold part not mentioned in passage - Eliminate
(C) They will have to assume quasi-governmental functions if current economic trends continue>> Unable to come up with good reason since if global corporations are participating in decision making with government they are assuming quasi-governmental functions and more expansion of such global operation they more they will have to assume quasi-governmental functions
(D) They have provided a model of economic success for regional trading blocs. >> bold part not mentioned in passage - Eliminate
(E) Their influence on world economics will continue to increase >> no such surety "of increase" is mentioned in the passage. Eliminate

4. According to the passage, one similarity between the FTA and Europe 1992 is that they both

(C) exemplify a trend toward regionalization of commercial markets -
Dictionary meaning : Regionalization is the tendency to form decentralized regions
There is some ambiguity. Basis definition it can also mean dividing each region, however passage intends regions becoming one bloc

(D) place the economic needs of the trading bloc ahead of those of the member nations - Unable to eliminate
(E) help to ensure the continued economic viability of the world community - Unable to eliminate

GMATNinja · Answer

Question 3 
 
(A) tells us that the growth of global corporation depends on a  "fully"  integrated international market. That goes beyond what the passage suggests. Sure, these corporations are leading the charge for integrated  regional  blocs, but that's not a universally integrated international market. Additionally, we know from the passage that certain agreements "will foster integration" within these regional markets, but it doesn't specify FULL integration -- it's possible that the agreements include some integration, without going as far as full integration.

Finally, we don't know whether there are OTHER ways that these corporations could continue to grow, so there's a problem with the word "depends" in answer choice (A). If they could grow through other means, then their continued growth doesn't depend on this single factor.

In short, we can eliminate (A) because the passage doesn't suggest anything nearly as black-and-white as the statement in that answer choice.

As for (E): remember that the question is asking about something the passage  suggests , NOT something that the passage directly states.

The first sentence of the passage provides the suggestion proposed in (E): "As the economic role of multinational, global corporations  expands , the international economic environment  will be shaped  increasingly not by governments or international institutions, but by the interaction between governments and global corporations, especially in the United States, Europe, and Japan."

Here, the author suggests that the current expansion of global corporations will continue to shape the economic environment in the future. This suggests that the expansion will continue.

(E) is the correct answer to question 3.

Question 4 
 
For (C): you can use context clues from the passage to nail down the definition of "regionalization" as used by the author. It's pretty clear that the author uses the word "regional" to talk about multi-county blocs. So, "regionalization" means developing these blocs. That's why (C) is a good fit for question 4.

For (D) and (E): unlike question 3, which asks us for something suggested by the passage, question 4 asks us for something that is directly mentioned in the passage.

The two similarities between the FTA and Europe 1992 are listed near the end of the paragraph: "both regional developments are highly significant in that they will foster integration in the two largest and richest markets of the world, as well as provoke questions about the future direction of the world trading system."

(C) matches up nicely with the first similarity, and there's just no mention of the info in either (D) or (E).

(C) is the correct answer to question 4.

I hope that helps!

likitwill · Answer

Hi  GMATNinja ,

I got all questions correct but I'm still unclear on one point: whether the increasing interaction between governments and global corps  lead  to the trend toward regional trading blocs, or the other way around?

The passage says "the international economic environment will be shaped...by the interaction between governments and global corporations" and "A significant factor in this shifting world economy is the trend toward regional trading blocs of nations..." It sounds to me like both the interaction and the trend toward regional trading blocs are separate causes of the shift.

I couldn't clearly define the relationship between these two, could you please help clear this up?
Thanks so much!

GMATNinja · Answer

Good question! To answer it, let's consider how the logic of the passage proceeds.

First, the passage tells that the role of global corporations is expanding. This, in turn, will increase the importance of interactions between governments and global corporations.

Next, we're told about "another significant factor" in the "shifting world economy" -- namely, a trend towards regional trading blocks. The author then gives examples of this trend, contrasts some of their differences, and points out how they will both affect the world economy.

So do increasing interactions between governments and corporations lead to regional trading blocks, or the other way around? While that's an interesting question, the passage doesn't give us much information to answer it. The passage doesn't rule out the possibility that these two trends could affect each other, but it doesn't really support it either. Rather, the passage merely suggests that both trends are important aspects of the shifting world economy.

In general, reading comp passages may raise interesting questions that they don't answer. But that doesn't mean we missed something as readers -- it's just that the passages often provide limited information. So drawing a distinction between what ideas can be reasonably supported and what can't is often a useful skill.

I hope that helps!

KarishmaB · Answer

As the economic role of global corporations expands, the international economic environment will be shaped increasingly by the interaction between governments and global corporations. A significant factor in this shifting world economy is the trend toward regional trading blocs of nations, which has a potentially large effect on the evolution of the world trading system.Two examples of this trend are ...
..
both regional developments are highly significant in that they will foster integration in the two largest and richest markets of the world, as well as provoke questions about the future direction of the world trading system.
 Question 1.

1. The primary purpose of the passage as a whole is to

(A) describe an initiative and propose its continuance
(B) chronicle a development and illustrate its inconsistencies
(C) identify a trend and suggest its importance
(D) summarize a process and question its significance
(E) report a phenomenon and outline its probable future

The entire passage is dedicated to identifying the trend, explaining it with 2 examples and suggesting how important they are. 
Hence (C) is correct.

(A) describe an initiative and propose its continuance

The author does not propose the continuance of anything. He explains why the trend is significant. He does not propose continuance.

(B) chronicle a development and illustrate its inconsistencies

No inconsistencies discussed.

(D) summarize a process and question its significance

He does not question the (doubt the) significance of the trends. He suggests that they are significant.

The first line does report the phenomenon and outline its probable future but the entire passage is focussed on the trend (a significant factor in the phenomenon) and its significance. So he wrote the first line to introduce the phenomenon and then identified a particular trend in the phenomenon and then talked the rest of the time about that trend. So he wanted to talk about the trend.

For example: 
I have many friends who I love dearly and who have been with me since my childhood days. One of those is Vic. 
I first met Vic in kindergarten... 
.... (all about Vic and my friendship)
Vic will continue to remain an  important part of my life.

What did I want to talk about? Vic!

Hence this is incorrect too.

VerbalBot · Answer

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As the economic role of multinational, global corporations expands

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As the economic role of multinational, global corporations expands

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