PrepTest 122, Section 1, Question 13
Robin: When a region's economy is faltering, many(81 more words not shown)
Which one of the following,(9 more words not shown)
- ACompanies hire more(17 more words not shown)
- BEven when economic(11 more words not shown)
- CEven people who(21 more words not shown)
- DPeople who have(18 more words not shown)
- EThe prices of(11 more words not shown)
Reading the argument
Losing many jobs isn't the same as everyone having no money left.
Robin describes a downward cycle: job losses reduce spending, which causes more job losses. Robin then proposes a way out. If prices fall far enough, people may start buying more and help the economy recover. I can see Terry's objection: a bargain doesn't help someone who has no money to spend. A lower price still has to be paid.
What we’re looking for
But Terry takes that concern too far by saying a price collapse cannot help. What about people who kept their jobs? Some consumers might still have money available. To weaken Terry's objection, I'd look for those potential buyers. We don't have to promise that every recession ends this way; we need to show why Terry hasn't ruled out the recovery Robin describes.
Working the answers
- A
This starts after the economy begins to improve. Terry's objection is that lower prices cannot get the improvement started because people have no money. Hiring people after a recovery begins may help it continue, but it doesn't explain how the first increase in spending could occur. A assumes we're already past the point Terry questions.
- B
Optimism doesn't pay for a purchase. People could expect better conditions eventually and still lack money to spend today. Terry could accept that expectation without giving up the claim that lower prices won't currently increase spending.
- CCorrect
Some people keep their jobs, cut their spending during the downturn, and build up savings. When prices collapse, those people have money available to respond to the bargains. They are the buyers missing from Terry's account.
The answer doesn't say everyone is financially secure or guarantee that this spending will produce a full recovery. It undermines Terry's reason for calling recovery through lower prices impossible: the economy still contains people with money they could spend.
- D
Terry already allows spending on basic necessities. The objection is that people have no money beyond those necessities, so they cannot increase their spending as Robin predicts. Repeating that people must buy food doesn't challenge that limit.
- E
Some prices remaining stable doesn't tell us whether people have money to spend when other prices fall. It neither supplies the potential buyers nor addresses Terry's claim about their lack of funds. We don't need every single price to collapse for Robin's proposed mechanism to be possible.
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