Logical Reasoning

PT108 · S2 · Q23 Economist: In any country, inflation

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Economist: In any country, inflation occurs when the money supply grows more than the production of goods and services grows.

Conclusion (Hence)

My country is very unlikely to experience significant inflation or deflation.

Evidence

In any country, inflation occurs when the money supply grows more than production.

Deflation occurs when production grows more than money supply.

In my country, gold anchors the money supply, so the money supply is very stable.

Evaluate

The author is arguing that his country is unlikely to experience much inflation or deflation, and then we're provided with what causes of each of those things.

So we should pause and say to ourselves:

Does he establish that money supply and production will not grow out of proportion with each other?

Nope, he just says that the money supply is stable.

Goal

Since he needs money supply and production to grow in sync with each other, he must be assuming that the production of goods and services in his country is also stable.

23.

Which one of the following is an assumption on which the economist's argument depends?

  1. Having stability in the production

    Too Strong: most effective means

    Nothing in this argument is comparing effectiveness. The author is never recommending one form of preventing inflation/deflation vs. another. He's just claiming that his country doesn't experience much of either, regardless of whether his country prevents it via the most effective means, the 2nd most effective means, the 3rd most effective, etc. The word "most" is wrong 99% of the time we see it in Necessary Assumption answers.

    4% picked this

  2. Having an anchor such as

    Too Strong: necessary

    The author just mentions that his country has a gold standard and indicates that this is sufficient to keep the money supply very stable. He never suggests that this is the only way to keep a money supply stable.

    11% picked this

  3. Correct

    The production of goods and

    Why this is right

    We predicted the missing idea that "in his country, production of goods and services is also very stable". If production is very stable, then production is unlikely to grow markedly. This answer is written in a Defender style, but it's an implication of the author's assumption that production is stable. It would be just as correct to say this argument assumes that "production is unlikely to shrink markedly". If we negate this answer, it becomes a big objection: the production of goods and services is likely to grow markedly If the money supply is very stable but production grows markedly, then deflation will occur, which would go against the author's conclusion.

    Skill tested: Necessary Assumption · how this choice captures the argument's function is the move to repeat next time.

    69% picked this

  4. Inflation is no more likely

    Relative vs. Absolute Irrelevant Comparison

    The author is only saying that both deflation and inflation are very unlikely, in an Absolute sense. He hasn't assumed anything about their Relative likelihood. I can say that "dying in a terrorist attack" and "dying by being hit by lightning" are both very unlikely. That doesn't mean I'm assuming that "dying in a terrorist attack is no more likely than dying by lightning". It might be that one of them has a 0.05% chance of occurring and the other has a 0.02% chance. Both of those are still very unlikely.

    9% picked this

  5. A stable money supply is

    Too Strong: most effective means

    Nothing in this argument is comparing effectiveness. The author is never recommending one form of preventing inflation/deflation vs. another. He's just claiming that his country doesn't experience much of either phenomenon, regardless of whether his country prevents inflation via the most effective means, the 2nd most effective means, the 3rd most effective, etc. The word "most" is wrong 99% of the time we see it in Necessary Assumption answers.

    6% picked this

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