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eitijan: Master | Next Rank: 500 Posts; Posts: 157; Joined: Sat Jan 30, 2016 5:55 am; Thanked: 1 times

by eitijan » Fri Mar 04, 2016 9:33 pm

Source: GMATPrep

Option E is correct?

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Source: Beat The GMAT — Reading Comprehension | Fri Mar 04, 2016 9:33 pm

MartyMurray: Legendary Member; Posts: 2135; Joined: Mon Feb 03, 2014 9:26 amFollowed by: 140 members; Location: https://martymurraycoaching.com/; Thanked: 955 times; GMAT Score:800

by MartyMurray » Thu Apr 07, 2016 4:30 pm

The passage describes two paths to increased wages.

"productivity improvements in goods traded internationally are likely to cause an increase in wages."

"the value of the country's currency will appreciate, which ... is the equivalent of increased wages"

If the movement of capital were restricted, while depending on how one defines "movement of capital is restricted" the first of those two paths might be open, the second would definitely not be open. So currencies could not appreciate.

In fact, the passage implies that currencies would not appreciate if movement of capital were restricted when it says "although in the past a few countries have kept their currencies deliberately undervalued, that is now much harder to do in a world where capital moves more freely."

Therefore, if movement of capital were restricted, what the passage says implies that in some cases workers might not be able to increase their wages by increasing productivity, because the second path to increased wages would not be open to them.

So E is not correct.

Marty Murray
Perfect Scoring Tutor With Over a Decade of Experience
MartyMurrayCoaching.com
Contact me at [email protected] for a free consultation.

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