While some economists believe that Germany should be warned by the European Commission that it could face the imposition of radical restrictions on its domestic fiscal policymaking as early as the beginning of next year, others say that Germany will take the warning seriously
only if it would be backed by sanctions.The sentence provides a contrasting situation where one group of economists says that Germany should be warned by EC whereas the other group says Germany will not take the warning seriously for which the warning must have support from various sanctions.
The second part of the original sentence is a conditional verb formation(if .. then clause) i.e. if sanctions back warning then Germany will take it seriously. Going by that non-underlined part of the second part of sentence uses simple future form of verb – will so the underlined part must have simple present form of verb. Also, pronoun ‘it’ properly refers to warning without any ambiguity.
Thus we can easily eliminate A, D and E. Since C slightly changes the meaning of the sentence by shifting the place of ‘only’ i.e. something other than sanctions can also back warning which is not the case. Hence B is the right correct answer.
A. only if it would be backed by sanctions. – WRONG. As discussed above.
B. only if it is backed by sanctions. – CORRECT.
C. if it is backed only by sanctions. - WRONG. As discussed above.
D. if it was only backed by sanctions. - WRONG. As discussed above.
E. if it would only be backed by sanctions. - WRONG. As discussed above.
Answer (B).