Whereas United States economic productivity grew at an annual rate of

Question 1

First, remember what we are trying to explain: "Several explanations have been offered for [the decline in the service sector's productivity growth] and for the discrepancy in productivity growth between the manufacturing and service sectors."

One possible explanation for this discrepancy in productivity growth is the budget-deficit explanation:

• The author contends that if the federal budget deficit were lower, then the interest rate would be lower too.
• If the interest rate were lower, investment in the development of new technologies would increase.
• Development of new technologies would spur productivity growth in the service sector. (note that the author does not say that the new technologies would spur productivity growth in the manufacturing sector)

This statement is consistent with the author's explanation, implying that a federal budget deficit decreases the amount of investment in new technologies. This does not WEAKEN the author's explanation, so (A) can be eliminated.


If high interest rates slowed growth equally in BOTH sectors, then the interest rates would not explain the DIFFERENCE (discrepancy) in productivity growth between the manufacturing and service sectors. This goes against the logic described above, thus weakening the explanation.

I hope that helps!
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1)You need to look at the entire passage in order to be able to answer any question as it would put the highlighted parts in context. Just to summarise, let's consider the below points:
1. Economic growth in the US has been sluggish
2. Manufacturing employs only 19.1% American workers whereas services employ 70% of the American workers
3. Productivity has grown in the manufacturing sector whereas it has shown a decline in services
4. Several possible arguments to showcase why manufacturing has shown an improvement in productivity whereas despite growth, services has shown a productivity decline
5. The author now talks about another possible reason why manufacturing is growing whereas services has stagnated
i. Argument by proponents: lower federal budget deficit -> lower interest rate -> higher investment in development of new technologies -> higher growth in services sector
ii. Service-sector managers who implement available technology , choose skillful workers can improve their companys' productivity
iii. Culprits of service sector stagnation: corporate takeovers and unnecessary governmental regulation
While you have not highlighted the part which the question is referring to, I am assuming it is the one mentioned in Premise 5 (i) with the linkage between federal budget deficit and investment in technology for service sector.
Now, looking at the options:
A. This option ends up strengthening the explanation given by the proponent of the federal budget deficit theory. INCORRECT
B. This again strengthens the argument as it implies that new technology, which is currently being hindered by the federal budget deficit, can actually improve the productivity in service sector companies. INCORRECT
C. This is not in context to the highlighted text. The highlighted text is about whether a particular economic policy can improve productivity in the service sector. This option gives more details about what the productivity improvements will end up impacting. INCORRECT
D. An option which strengthen the relationship in the highlighted text. It highlights the difference between service and manufacturing implying higher investment in technology for service which is being hindered by the federal budget deficit. INCORRECT
E. The passage at multiple points mentions that it is trying to find the root cause for why manufacturing industry productivity is registering a growth while the service industry productivity is declining. For a reason to be valid it should impact the service industry more than it does manufacturing. This option attacks that gap showcasing that the high interest rates impact both the industries equally and this cannot be looked at as a cause for sluggish service sector productivity alone. CORRECT
Thus, the answer is E.

2)"Please go through the line "since the 1970’s, manufacturing workers, faced with strong foreign competition, have learned to work more efficiently in order to keep their jobs in the United States, but service workers, who are typically under less global competitive pressure, have not. However, the pressure on manufacturing workers in the United States to work more efficiently has generally been overstated, often for political reasons. In fact, while some manufacturing jobs have been lost due to foreign competition, many more have been lost simply because of slow growth in demand for manufactured goods.". Hence A.

3)"Since 1980, productivity improvements in manufacturing have moved the United States from a position of acute decline in manufacturing to one of world prominence." It is asking immediate before 1980. Hence A.

4)"The culprits for service-sector productivity stagnation are the forces—such as corporate takeovers and unnecessary governmental regulation—that distract managers from the task of making optimal use of available resources". Only C makes sense.
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Passage breakdown

In the first paragraph (P1), the author presents a discrepancy, provides two possible explanations for the discrepancy, and dismisses both explanations.

• The discrepancy: the manufacturing sector has seen productivity growth, while the services sectors has not.
• Two explanations are offered and dismissed by the author.

In the second paragraph, the author: presents and rejects another explanation, then provides his/her own argument to resolve the discrepancy.

• The author argues that "forces such as corporate takeovers and unnecessary governmental regulation that distract managers from the task of making optimal use of available resources" are the culprits for this stagnation.

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
• Question 3
• Question 4

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JarvisR:

Can you explain how is answer to question 3 option C and not option A.
A says ,"fewer governmental regulations" , while passage says, "unnecessary governmental regulations".
Then why can't option A be the answer.

mikemcgarry

Question 4

Answer choice C says less government regulation but the last sentence in passage says unnecessary government regulation. it is not compulsory that less regulation must be unnecessary one. I feel choice C not a right answer.

Please correct me if i am wrong.

Hi imyuva,

4.The author of the passage would be most likely to agree with which of the following statements about productivity improvements in United States service companies?

(C) Such improvements would be more easily accomplished if there were fewer governmental regulations of the service sector.


The culprits for service-sector productivity stagnation are the forces such as corporate takeovers and unnecessary governmental regulation that distract managers from the task of making optimal use of available resources. ---> what this sentence means is that corporate takeovers and unnecessary governmental regulation distract managers from doing ... and thus in turn hamper productivity .

Unnecessary governmental regulation --causes--> distract managers from the task of making optimal use of available resources ----> leads to productivity stagnation
--> If the Unnecessary governmental regulations are removed, then managers should no longer be distracted and thus they can concentrate on the task of making optimal use of available resources , leading to productivity improvements .

Hope this helps!!
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Thank you for responding.

I agree this statement


Option C talks about less government regulation. Our passage doesn't tell about reducing government regulations. Even after less government regulation and 1 or 2 unnecessary regulations stays, it would stop productivity.

HI GMATNinja, mikemcgarry,

Can you pls POE for below que



Does it not clearly says direct cause of job loss
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Dear NandishSS,

I'm happy to respond.

The passage clearly says, in the sentence you quoted, that at least a few "manufacturing jobs have been lost due to foreign competition." Thus, one "effect of foreign competition effect of foreign competition" was the direct cause of the loss of at least a few jobs. Choice (B) contradicts this and is not correct.

Meanwhile, the passage says: "However, the pressure on manufacturing workers in the United States to work more efficiently has generally been overstated, often for political reasons." It has been "overstated," in other words, "exaggerated." Choice (A) is correct.

Does all this make sense?
Mike
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This is because A would strengthen the argument. If the budget deficit actually does reduce investments then the reasoning remains intact. Option E equalises everything by stating that mfg and services would be affected equally and hence the argument is flawed to explain the discrepancy in the productivity rates.

Why is the answer to question 3 A and not D?

Isn't it implied that the annual growth rate since early 1970s has been 1 percent.?

"Whereas United States economic productivity grew at an annual rate of 3 percent from 1945 to 1965, [United States economic productivity] has grown at an annual rate of only about 1 percent since the early 1970’s."

Notice that these figures refer to OVERALL economic productivity in the United States, not just economic productivity in the manufacturing sector. The productivity growth rate of the manufacturing sector may have been different than the productivity growth rate of all sectors combined. (D) might be true, but, given the information in the passage, it is just as likely that (D) is NOT true.

"Since 1980, productivity improvements in manufacturing have moved the United States from a position of acute decline in manufacturing to one of world prominence."

From this sentence, we can infer that, before 1980, productivity improvements in manufacturing were in a position of acute decline. After 1980, productivity improvements in manufacturing were in a position of world prominence. So relative to post-1980 performance, pre-1980 performance was poor. This makes (A) the best choice!
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HI GMATNinja, mikemcgarry,

Can you please explain answer of Q4 ? Last sentence of passage says unnecessary government regulation. it is not necessary that less regulation must be unnecessary one. So , Why we chose C as Correct Answer . Are we choosing because other option seems to be incorrect ? Because of difference in meaning between less regulation and unnecessary regulation , I chose option D as it was mentioned in the passage : thereby increasing investment in the development of new technologies, which would spur productivity growth in the service sector. Can you please explain this ?

To answer question #4, we need to find an answer choice with which the author would most likely agree. Let's first look at (D):

In the last paragraph, the author explores "another explanation" for the lack of growth in the service sector, and this explanation focuses on increasing investment in technological advances. However, the author disagrees with this explanation, saying that there is "no dearth (or lack) of technological resources" -- some managers just fail to use these resources wisely.

So, the author would not agree that companies need to invest heavily in the development of new technologies, because those technologies already exist. (D) is out.

After the author is done with trashing the explanation outlined above, he/she identifies the real "culprits" behind stagnation in the service sector: "corporate takeovers and unnecessary governmental regulation that distract managers from the task of making optimal use of available resources."

From this, we can infer that the author would most likely agree that productivity improvements would be "more easily accomplished if there were fewer governmental regulations of the service sector," as stated in answer choice (C).

Notice that the question asks whether the author would "most likely" agree with the correct answer choice, which is different than proving that the author would absolutely agree with that choice. Because the author would definitely not agree with any of the other choices, we can say that (C) is the best answer even if it doesn't specify that only "unnecessary" regulations are removed.

(C) is the correct answer to question #4.

I hope that helps!
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Please correct Question 1 - what is line 57 referring to? Bunuel

Passage Map:
P1 - To argue that Manufacturing is not likely the cause of productivity stagnation since the early 1970s by pointing out a potential cause
P2 - to provide another potential explanation explaining why manufacturing is not likely the cause.


Question 1 - Which would weaken the budget deficit explanation? (presumably line 57 is P2)
The explanation is that a lower budget deficit = lower interest rates = higher investment in technology = greater productivity growth

We are asked to weaken this.

A actually strengthens the relationship above. A says deficit = invest less money in R&D. Pretty much what the explanation says. Incorrect.
B does nothing to the explanation given for how the budget deficit impacts investment. It merely states the impact of tech. Incorrect
C is incorrect - it essentially states a separate relationship. Incorrect.
D does nothing to weaken the relationship between a budget deficit and investment in tech. D merely states why investment in tech is so important.
E is correct because it tells us that manufacturing is impacted by interest rates, which are higher during a budget deficit, just as much as services are, so its unlikely the disparity between productivity levels can be due to budget deficits.

Question 2
Effect of FC on manufacturing is discussed in P1
A - correct. "the pressure on manufacturing workers in the US...has been overstated"
B - what? It is stated that some jobs have been lost in the last sentence of P1.
C - Competition has increased productivity- not the other way. Incorrect
D - this is absolute crap. The last sentence describes slowing of growth in demand as a cause of job less, nothing else. Incorrect
E - is incorrect because of the last sentence in P1.

Question 3
I got tripped on this one because I read information relating to the service sector, not the manufacturing sector.
In P1, we are told that "Since 1980, productivity improvements in manufacturing have moved the United States from a position of acute decline in manufacturing to one of world prominence"

This basically says that after 1980 things went great, but before 1980 things were in the red.

A - is correct as it accurately describes the reality.
B - is incorrect because this happened after 1980
C - false. This was economic productivity, not mfg. Incorrect
D - same as C.
E - is incorrect for the same reason as B. Logically, if you chose B then E would need to be correct and vice versa.

Question 4
Mostly discussed in P2.
A - is incorrect as it contradicts the last sentence.
B - is incorrect as it warps information and constrews the facts. This is literally the only fact we are told about high productivity companies - "High productivity growth levels attained by leading edge service companies indicate that service sector managers who wisely implement available technology and choose skillful workers can significantly improve their companies’ productivity."
C - True - we are told in the last sentence that productivity stagnation is caused by government regulation and corporate takeovers. Correct
D - incorrect as we are literally told that such improvements can also be made by choosing skillful workers.
E - incorrect because we are only told that manufacturing firms improved their productivity due to global pressures. We are told in P1 that "service firms are under less global pressure"

If high interest rates slowed growth equally in BOTH sectors, then the interest rates would not explain the DIFFERENCE (discrepancy) in productivity growth between the manufacturing and service sectors. This goes against the logic described above, thus weakening the explanation.


I understand the logic of the correct answer that both sectors have same growth so high interest rate doesn't play any role.



As per logic:
Deficit federal budget--> lower interest rate --> new technologies--> spur productivity

Add Not :
in the logic is mentioned: NOT Deficit federal budget--> NOT lower interest rate --> NOT new technologies--> NOT spur productivity

thus, Higher interest rate --> slow productivity.


In the option mentioned: Higher interest rate --> slow productivity.

so it is same as logic.


kindly clarify the meaning.GMATNinja

The logic presented in the passage is that a lower federal budget deficit would spur productivity growth in the service sector (again, note that the author does NOT say that a lower federal budget deficit would spur productivity growth in the manufacturing sector).

But remember, this logic is presented as an EXPLANATION for the discrepancy in productivity growth between the manufacturing and service sectors. According to the budget-deficit explanation, higher interest rates would slow productivity growth in the service sector--and that could explain why productivity growth has been slower in the service sector. In other words, maybe high interest rates have slowed productivity growth in the service sector but NOT in the manufacturing sector.

But that explanation only works if higher interest rates affect the two sectors differently. If higher interest rates affect both sectors equally, then we can't blame the discrepancy in productivity growth on the budget-deficit/interest rate thing.

So choice (E) goes against the overall logic of the budget-deficit explanation.

I hope that clears it up!
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In Q3. Isn't (A) and (E) mean the same thing. In (A), productivity was as less before, and in (E) productivity was higher after?