Many Political Economists Believe that the Soundest Indicator GMAT Reading Comprehension

Reading passage question

Many political economists believe that the soundest indicator of the economic health of a nation is the nation’s gross national product (GNP) per capita—a figure reached by dividing the total value of the goods (5) produced yearly in a nation by its population and taken to be a measure of the welfare of the nation’s residents. But there are many factors affecting residents’ welfare that are not captured by per capita GNP; human indicators, while sometimes more difficult to calculate (10) or document, provide sounder measures of a nation’s progress than does the indicator championed by these economists. These human indicators include nutrition

and life expectancy; birth weight and level of infant mortality; ratio of population level to availability of (15) resources; employment opportunities; and the ability of governments to provide services such as education, clean water, medicine, public transportation, and mass communication for their residents.

The economists defend their use of per capita GNP (20) as the sole measure of a nation’s economic health by claiming that improvements in per capita GNP eventually stimulate improvements in human indicators. But, in actuality, this often fails to occur. Even in nations where economic stimulation has (25) brought about substantial improvements in per capita

GNP, economic health as measured by human indicators does not always reach a level commensurate with the per capita GNP. Nations that have achieved a relatively high per capita GNP, for example, sometimes (30) experience levels of infant survival, literacy, nutrition, and life expectancy no greater than levels in nations where per capita GNP is relatively low. In addition,

because per capita GNP is an averaged figure, it often presents a distorted picture of the wealth of a nation; (35) for example, in a relatively sparsely populated nation where a small percentage of residents receives most of the economic benefits of production while the majority receives very little benefit, per capita GNP may nevertheless be high. The welfare of a nation’s (40) residents is a matter not merely of total economic benefit, but also of the distribution of economic benefits across the entire society. Measuring a nation’s economic health only by total wealth frequently obscures a lack of distribution of wealth across the (45) society as a whole.

In light of the potential for such imbalances in distribution of economic benefits, some nations have begun to realize that their domestic economic efforts are better directed away from attempting to raise per (50) capita GNP and instead toward ensuring that the conditions measured by human indicators are salutary. They recognize that unless a shift in focus away from using material wealth as the sole indicator of economic success is effected, the well-being of the nation may be (55) endangered, and that nations that do well according to human indicators may thrive even if their per capita GNP remains stable or lags behind that of other nations.

“Many political economists believe that the soundest indicator of the economic health of a nation is the nation’s gross national product.”- is a comprehension passage with answers. Candidates need a strong knowledge of English GMAT reading comprehension. This GMAT Reading Comprehension consists of 7 comprehension questions. The GMAT Reading Comprehension questions are designed for the purpose of testing candidates’ abilities in understanding, analyzing, and applying information or concepts. Candidates can actively prepare with the help of GMAT Reading Comprehension Practice Question

Solution and Explanation

Question 1
Which one of the following titles most accurately expresses the main point of the passage?

(A) “The Shifting Meaning of Per Capita GNP: A Historical Perspective”
(B) “A Defense of Per Capita GNP: An Economist’s Rejoinder”
(C) “The Preferability of Human Indicators as Measures of National Economic Health”
(D) “Total Wealth vs. Distribution of Wealth as a Measure of Economic Health”
(E) “A New Method of Calculating Per Capita GNP to Measure National Economic Health”

Question 2
The term “welfare” is used in the first paragraph to refer most specifically to which one of the following?

(A) the overall quality of life for individuals in a nation
(B) the services provided to individuals by a government
(C) the material wealth owned by individuals in a nation
(D) the extent to which the distribution of wealth among individuals in a nation is balanced
(E) government efforts to redistribute wealth across society as a whole

Question 3
The passage provides specific information about each of the following EXCEPT:

(A) how per capita GNP is calculated
(B) what many political economists believe to be an accurate measure of a nation’s economic health
(C) how nations with a relatively low per capita GNP can sometimes be economically healthier than nations whose per capita GNP is higher
(D) why human indicators may not provide the same picture of a nation’s economic health that per capita GNP does
(E) how nations can adjust their domestic economic efforts to bring about substantial improvements in per capita GNP

Question 4
Which one of the following scenarios, if true, would most clearly be a counterexample to the views expressed in the last paragraph of the passage?

(A) The decision by a nation with a low level of economic health as measured by human indicators to focus on increasing the levels of human indicators results in slower growth in its per capita GNP.
(B) The decision by a nation with a low level of economic health as measured by human indicators to focus on increasing domestic production of goods results in significant improvements in the levels of human indicators.
(C) The decision by a nation with a low level of economic health as measured by human indicators to focus on increasing the levels of human indicators results in increased growth in per capita GNP.
(D) The decision by a nation with a low per capita GNP to focus on improving its level of economic health as measured by human indicators fails to bring about an increase in per capita GNP.
(E) The decision by a nation with a low per capita GNP to focus on increasing domestic production of goods fails to improve its economic health as measured by human indicators.

Question 5
The primary function of the last paragraph of the passage is to

(A) offer a synthesis of the opposing positions outlined in the first two paragraphs
(B) expose the inadequacies of both positions outlined in the first two paragraphs
(C) summarize the argument made in the first two paragraphs
(D) correct a weakness in the political economists’ position as outlined in the second paragraph
(E) suggest policy implications of the argument made in the first two paragraphs

Question 6
Based on the passage, the political economists discussed in the passage would be most likely to agree with which one of the following statements?

(A) A change in a nation’s per capita GNP predicts a similar future change in the state of human indicators in that nation.
(B) The level of human indicators in a nation is irrelevant to the welfare of the individuals in that nation.
(C) A high per capita GNP in a nation usually indicates that the wealth in the nation is not distributed across the society as a whole.
(D) The welfare of a nation’s residents is irrelevant to the economic health of the nation.
(E) The use of indicators other than material wealth to measure economic well-being would benefit a nation.

Question 7
In the passage, the author’s primary concern is to

(A) delineate a new method of directing domestic economic efforts
(B) point out the weaknesses in one standard for measuring a nation’s welfare
(C) explain the fact that some nations have both a high per capita GNP and a low quality of life for its citizens
(D) demonstrate that unequal distribution of wealth is an inevitable result of a high per capita GNP
(E) argue that political economists alone should be responsible for economic policy decisions

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