Neither a rising standard of living nor balanced trade, by itself, est

Question

Neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace. Both are required simultaneously since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country's standard of living.

If the facts stated in the passage above are true, a proper test of a country's ability to be competitive is its ability to

(A) balance its trade while its standard of living rises
(B) balance its trade while its standard of living falls
(C) increase trade deficits while its standard of living rises
(D) decrease trade deficits while its standard of living falls
(E) keep its standard of living constant while trade deficits rise

fluke · Accepted Answer

I had little to no idea how standard of living & balanced trade dictate a country's economic competitiveness.

I gathered the information from these two statements in the passage and answered in less than 40 secs.

1st sentence:
Rising standard of living is good.
Balanced trade is good.
But, both should co-exist to gain a competitive edge.

2nd: Why both should co-exist?
Rising standard of living is not good when it is an effect of "growing trade deficits". Growing trade deficit(Bad)
Balanced trade is not good when it is an effect of "declining standard of living". declining standard of living(Bad)

A gives the competitive scenario:
"balance its trade while its standard of living rises"

Two goods together.

Ans: "A"

Alexey1989x · Answer

So, to be able to compete on international market any country should maintain at decent level its trade balance and living standarts.
We need to find proper pair "="(trade balance)/UP (standarts of living):

A) "="(trade balance)/"UP" (standarts of living) Correct one!
B) "="(trade balance)/"DOWN" (standarts of living) doesn't match, hence incorrect.
C) "DOWN"(trade balance)/"UP" (standarts of living) doesn't match, hence incorrect.
D) "="(trade balance)/"DOWN" (standarts of living) doesn't match, hence incorrect.
E) "UP"(trade balance)/"=" (standarts of living) doesn't match, hence incorrect.

Pretty straightforward one

maratikus · Answer

true test: absense of trade deficit while increasing standard of living -> A
B is incorrect because trade deficit is eliminated at expense of standard of living
C is incorrect because standard of living is increasing at the expense of trade balance
D is incorrect because that's just horrible - huge debt and falling standard of living
E is incorrect because standard of living is funded with trade deficit

manojkumarmatala · Answer

understanding the passage:- 
Conclusion is : Both factors are required simultaneously . 
Premise is : As standards of living increase trade deficit drops. But, when standards decrease then trade deficit

So answers should be saying, there should be a balance between both the parameters. Ideally, both should rise.

If the facts stated in the passage above are true, a proper test of a country's ability to be competitive is its ability to

(A) balance its trade while its standard of living rises - Yes
(B) balance its trade while its standard of living falls - Once increases other falls. OFS
(C) increase trade deficits while its standard of living rises- Once increases while other falls. OFS
 
(D) decrease trade deficits while its standard of living falls - Once increases while other falls. 
(E) keep its standard of living constant while trade deficits rise - Once increases while other is kept constant.

reynaldreni · Answer

Decoding the argument
 "Neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace. Both are required simultaneously"     
 "since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country's standard of living."

The question stems asks us to test the country's ability based on the rule mentioned. "A" makes it clear that both are required.

adkikani · Answer

Hi Expert, 
I am confused between option A and B.
As per first statement in stimuli, i need both - rising standard of living and balanced trade to establish country's ability to compete. As per second sentence, if any one of these parameters decline it needs to be compensated by other. IMO, the OA should be B

GMATNinjaTwo · Answer

adkikani ,
 
As explained by  Alexey1989x , the passage states that both a rising standard of living and balanced trade are required simultaneously to establish a country's ability to compete. If we only know that a country can balance its trade while its standard of living falls (choice B), we do not know whether it can balance its trade while its standard of living rises. Thus, we do not know if it can achieve both requirements simultaneously.

nandetapuri · Answer

Neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace. Both are required simultaneously since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country's standard of living.

The first line expresses two conditions for the country to compete in international marketplace. The last lines are only to confuse you so that you chose a wrong answer. The two conditions are rising standards of living with balanced trade.

If the facts stated in the passage above are true, a proper test of a country's ability to be competitive is its ability to
 
(A) balance its trade while its standard of living rises 
 (B) balance its trade while its standard of living falls 
 (C) increase trade deficits while its standard of living rises 
 (D) decrease trade deficits while its standard of living falls
(E) keep its standard of living constant while trade deficits rise

RMD007 · Answer

GMATNinja , I am unable to ascertain between choice A and choice E. From the logic presented in the argument, both the options seems good.

Can you please clarify my doubt here?

The only argument that I can figure is - The argument talks about balancing the trade but does not provide any information about keeping standard of living CONSTANT.

is the reasoning correct?

GMATNinja · Answer

RMD007 , I think you've got it! The passage says that a country needs both 1) a  rising  standard of living and 2) balanced trade in order to compete in the international marketplace. If a country has a CONSTANT standard of living, then it does not have a RISING standard of living. A country with a CONSTANT standard of living would not meet the first criteria and thus would not be competitive.

That's why (E) should be eliminated, and (A) is the best choice. I hope that helps!

Dinesh654 · Answer

Hello experts,  GMATNinjaTwo   GMATNinja

I am not able to understand this-
acc. to the passage, trade deficits can be balanced when S.O.L. decreases.

which exactly is B--> should be the answer.

"Both are required simultaneously since standards of living can rise because of growing trade deficits" -- 1
and "trade can be balanced by means of a decline in a country's standard of living."--2

how these two equations relate with each other?

I think, I am not able to understand the basic logic behind this question.

how A is the right answer?

GMATNinja · Answer

When you're analyzing a passage, start by thinking about how the pieces of the argument fit together. Why did the author include each sentence?

The author concludes that "neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace." Instead of just one of these factors, the author argues that BOTH are required simultaneously.

This conclusion is supported by the following evidence: "standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country's standard of living."

This evidence shows that if a country only has one of the two factors, then that country is  NOT  able to compete in the international marketplace. So, we're not looking to match these words to prove that a country  is  competitive. Instead, we're looking for an option that has BOTH of the factors the author listed (rising standard of living and balanced trade).

Here's (B):
 
(B) is out because it matches the example of a country that is NOT able to compete.

Here's (A):
 
These are the two factors that the author cares about. (A) is the correct answer choice.

I hope that helps!

NikhilThachil · Answer

Sorry but I couldn't understand how a) is the right answer?

egmat · Answer

Hey  NikhilThachil ,

There are some excellent expert responses for this question. That said, I can help with this one!

The key to solving this question lies in understanding the function played by the following portion of the stimulus.

“  since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country's standard of living.  ”

Here  is a video I made that may help provide clarity. You can check out the  step-by-step solution on Neuron by e-GMAT  to see the complete framework for handling these paradox-based inference questions, including visualization techniques and alternative approaches. You can also explore other GMAT official questions with detailed solutions on Neuron for structured practice  here  - they have comprehensive explanations that really help you build pattern recognition for the test.

Hope this helps you! 
Harsha

MartyTargetTestPrep · Answer

Here's what the passage says.

Neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace. Both are required simultaneously ....

So, two things are required for a country's ability to compete to be established: a rising standard of living and balanced trade.

Now, let's consider (A).

If the facts stated in the passage above are true, a proper test of a country's ability to be competitive is its ability to

(A) balance its trade while its standard of living rises

We see that (A) follows from what the passage says. After all, if "a rising standard of living" and "balanced trade" are "required" for establishing a country's ability to compete, then it follows that, if we want to "test" a country's ability to competitive, then we should consider its ability to do the two things "required" for establishing a country's ability to compete, "balance its trade while its standard of living rises," which are just what (A) mentions.

VerbalBot · Answer

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Neither a rising standard of living nor balanced trade, by itself, est

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Neither a rising standard of living nor balanced trade, by itself, est

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