QUESTION TEXT: It is a principle of economics that…
QUESTION TYPE: Principle
PRINCIPLE: Economic growth requires a balance of consumer confidence and consumer skepticism.
ANALYSIS: The principle gives us necessary conditions for growth. We can have growth only with those conditions.
This is extremely important to understand. The principle won’t let us say which conditions will lead to economic growth. We would need sufficient conditions to say that.
Instead, the principle only allows us to say when we won’t have growth: if we are missing confidence or a small amount of skepticism.
___________
- This gets things backwards. Confidence and skepticism were necessary conditions, not sufficient conditions.
- A country with a prevailing attitude of pure confidence won’t experience growth. We need some skepticism.
Also, the stimulus gives us no sufficient conditions, so we can never say when growth will occur.
- The opposite conclusion is true. You need a balance of both confidence and skepticism for growth.
- CORRECT. This is true. Growth requires some skepticism as well.
- There are two errors. First, the stimulus gave necessary conditions, not sufficient conditions. Second, this answer choice mangles the conditions. We need mostly confidence and some skepticism, not the reverse.
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