PrepTest 106 - Section 4 - Passage 3 - Question 18

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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

18.

Based on the passage, a ████████████ █████████ ██ ████ ██████ ██ █████ ████ █ ██████████ ███████ ██ ███ ████ █████████ █████ ███ ██ ███ █████████ ███████████

Question Type

Implied

Other’s perspective

This is an Inference from the steady-state economists’ perspective question. The steady-state economists’ vision for a successful economy can be found in P2 and P3. They think that a successful economy remains in equilibrium with nature and implements alternatives to growth without sacrificing the ability to satisfy human wants. We are looking for a principle that generalizes these ideas.

A successful economy ████ ██████████ █████████ ██ ████████ ██ ███████ ██████████

Unsupported. The steady-state economists care about efficient resource use; they don’t define a successful economy by how the resources were made.

A successful economy █████████ █████ █████ ██████ ████ ██ ███████ ███ █████

Unsupported. The steady-state economists think that a successful economy satisfies human wants while remaining in equilibrium with nature; they don’t define a successful economy as one that satisfies human wants faster than it creates new ones.

A successful economy █████████ ██ ███████████ ████ ██████ █████ █████ ██████████ █████ ██████

This is supported. Steady-state economists think that a successful economy is in equilibrium with nature without sacrificing human wants.

98%

A successful economy ██████████ █████ ████████ █████ ██ ███████ ███████

This is not supported. The steady-state economists oppose growth beyond equilibrium with nature. They don’t oppose all growth.

A successful economy █████████ ███ █████ ██ █████████ ███ █████████ ██ █████ █████████ ██ ████ ███████

Unsupported. The steady-state economists think that a successful economy needs to satisfy wants while implementing alternatives to growth.

PrepTest 106 - Section 4 - Passage 3 - Question 18

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