PrepTest 106 - Section 4 - Passage 3 - Question 19

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Recently, a new school of economics called steady-state economics has seriously challenged neoclassical economics, the reigning school in Western economic decision making. ███

Intro topic · Steady-state economics (new view) vs. neoclassical economics (traditional view)

Neoclassical view · Economy is closed system between producers and consumers

Growth is necessary and unlimited

Steady-state view · Economy is open system dependent on nature

Neoclassical view is wrong; not a closed system. Resources enter system, waste leaves.

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Implications · of steady-state view

Growth is neither necessary nor unlimited. Economy has optimal size in theory. Too much growth is dangerous because it depletes resources and creates waste.

Neoclassical rebuttal · Natural resources can be replaced if depleted

problem · according to steady-state view

Western economies have exceeded optimal size

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Solution · according to steady-state view

Meet human wants without growth, e.g. by using resources more efficiently

Passage Style

Critique or debate

19.

In the view of steady-state ███████████ █████ ███ ██ ███ █████████ ██ █ ███████████ ██████████ ██ ████████ ██ ██ ███ █████ ████████ ██ ███ ████████

Question Type

Implied

Other’s perspective

This is an Inference question. We are looking for the noneconomic factors that the steady-state economists think limit economic growth. We can find these factors in P2: Nature’s capacity to regenerate raw material and absorb waste limits the size of the economy.

the total amount ██ █████ █████

Unsupported. Steady-state economists do not cite the amount of human wants as a factor that limits economic growth. Instead, they think that nature is what limits growth.

the index of ███████████████ ███████████ ██████

Unsupported. This index is a measurement of how much the economy can grow within the constraints of nature; this index itself is not a limitation on growth, it just tells us how much growth is possible.

16%

the capacity of ██████ ██ ██████ █████

These constraints of nature are the noneconomic factors that the steady-state economists believe limit economic growth.

71%

the problems associated ████ ████████ ██████

Unsupported. Steady-state economists do not reference the problems associated with economic growth as a factor that limits how much the economy can grow. Instead, they think that nature is what limits growth.

the possibility of ████████ ██████████

Unsupported. Steady-state economists do not reference the possibility of stagnation as a factor that limits economic growth. Instead, they think that nature is what limits growth.

PrepTest 106 - Section 4 - Passage 3 - Question 19

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