[求助]prep1 Essay10 Q34 Q36

sunny8843

Essay #10.  154    (22742-!-item-!-188;#058&00154-00)

 

Conventional wisdom has it that large deficits in the United States budget cause interest rates to rise.  Two main arguments are given for this claim.  According to the first, as the deficit increases, the government will borrow more to make up for the ensuing shortage of funds.  Consequently, it is argued, if both the total supply of credit (money available for borrowing) and the amount of credit sought by nongovernment borrowers remain relatively stable, as is often supposed, then the price of credit (the interest rate) will increase.  That this is so is suggested by the basic economic principle that if supplies of a commodity (here, credit) remain fixed and demand for that commodity increases, its price will also increase.  The second argument supposes that the government will tend to finance its deficits by increasing the money supply with insufficient regard for whether there is enough room for economic growth to enable such an increase to occur without causing inflation.  It is then argued that financiers will expect the deficit to cause inflation and will raise interest rates, anticipating that because of inflation the money they lend will be worth less when paid back.

 

Unfortunately for the first argument, it is unreasonable to assume that nongovernment borrowing and the supply of credit will remain relatively stable.  Nongovernment borrowing sometimes decreases.  When it does, increased government borrowing will not necessarily push up the total demand for credit.  Alternatively, when credit availability increases, for example through greater foreign lending to the United States, then interest rates need not rise, even if both private and government borrowing increase.

 

The second argument is also problematic.  Financing the deficit by increasing the money supply should cause inflation only when there is not enough room for economic growth.  Currently, there is no reason to expect deficits to cause inflation.  However, since many financiers believe that deficits ordinarily create inflation, then admittedly they will be inclined to raise interest rates to offset mistakenly anticipated inflation.  This effect, however, is due to ignorance, not to the deficit itself, and could be lessened by educating financiers on this issue.

Question #34.  154-03  (22834-!-item-!-188;#058&000154-03)

 

It can be inferred from the passage that proponents of the second argument would most likely agree with which of the following statements?

(A) The United States government does not usually care whether or not inflation increases.

(B) People in the United States government generally know very little about economics.

(C) The United States government is sometimes careless in formulating its economic policies.

(D) The United States government sometimes relies too much on the easy availability of foreign credit.

(E) The United States government increases the money supply whenever there is enough room for growth to support the increase.

ANS:C（我在AE中徘徊，结果答案是C……）

 

Question #36.  154-08  (22926-!-item-!-188;#058&000154-08)

 

The author uses the term "admittedly" (see highlighted text) in order to indicate that

(A) the second argument has some truth to it, though not for the reasons usually supposed

(B) the author has not been successful in attempting to point out inadequacies in the two arguments

(C) the thesis that large deficits directly cause interest rates to rise has strong support after all

(D) financiers should admit that they were wrong in thinking that large deficits will cause higher inflation rates

(E) financiers generally do not think that the author's criticisms of the second argument are worthy of consideration

ANS:A（错选D）

百思不得其解，恳请各位大侠相助！

hughlv

第一题的关键是这句话The second argument supposes that the government will tend to finance its deficits by increasing the money supply with insufficient regard for ...。这里的insufficient regard就是考虑不周的意思，与选项C匹配。

第二道题里主要是要看明白题意。fanancier认为increasing money supply会导致inflation，而为了制止infation的话他们当然应该提高利率。admittedly在句子里的作用就是强调后半段推理的合理性--理所当然的应该做什么事情，也说明了作者对这一步推理的认同，可是前半截关于一直会导致inflation的不对，所以这整个推理就有问题了。看看A表达的就是这个意思。

sunny8843

谢谢咯，我有时候就是没有完全理解，汗……