GMAT Verbal Critical Reasoning
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Author:  Robert.Delane [ Mon Apr 23, 2012 4:05 am ]
Post subject:  GMAT Verbal Critical Reasoning

Columnist: In these times of fiscal correctness, it is heresy to call for expansionary fiscal policy to revive the economy. Yet sound economic principles call for such a prescription, even if it sounds like the wild cry of a slump-struck corporation bothered only about its bottom line.

Which of the following, if true, would most support the author’s views on fiscal policy?

A. In the past, most governments have adopted a conservative attitude in the face of an economic slump.
B. An expansionary fiscal policy would be welcomed by companies that have been overwhelmed by the slump.
C. An expansionary fiscal policy leading to more expenditure would encourage the revival of a depressed economy
D. Sound economic principles suggest that to increase fiscal expenditure during a depression would raise the import bill and adversely affect the trade deficit.
E. Fiscal policy is often used to provoke a reaction in the market.

(C) The author clearly endorses an expansionary fiscal policy.
Choice (A) fails to lend support to this endorsement.
Choice (B) merely restates the paragraph.
Choice (D) negates the author’s suggestion.
Choice (E) is a neutral statement, and fails to provide reasoning as to why an expansionary policy makes sense.
Choice (C), the best choice, provides a sound reason for following an expansionary policy, even in a time of fiscal correctness.


Can you explain me what "an expansionary fiscal policy" is?
Thank you

Author:  Nick [ Mon Apr 23, 2012 4:10 am ]
Post subject:  Re: GMAT Verbal Critical Reasoning

An expansionary fiscal policy is one in which the government spends more money than it receives in tax revenue. This is often done to spur growth in a recession.

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