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CAT Exam | CAT Verbal Questions: Economics

CAT reading comprehension: Economics

Reading comprehensions form a very important part in all the entrance exams for PGDM/MBA course. They are included in the Verbal Ability and Reading Comprehension section of the CAT question paper. Apart from CAT, these questions also form a part of MBA/PGDM exams like XAT, SNAP, IIFT etc. From the trends of previous years CAT papers, it is evident that Reading comprehensions forms around half of the total questions in the VARC section. Reading comprehension can cover many topics like science, history, geography, current affairs, Economics, humanities, etc. Here, we will discuss the reading comprehensions on Economics.

Below are the details about the number of reading comprehension on economics questions for different competitive MBA exam:

CAT

RC on Economics
YearNo of QuestionsGood attemptDifficulty
2020
Slot 153Moderate
Slot 20Difficult
Slot 30
Slot 10
Slot 252Difficult
Slot 153Moderate
Slot 2
 
XAT
RC on Economics
YearNumber of QuestionsGood attemptDifficulty
2020
2019
201831Difficult

SNAP

RC on Economics
YearNumber of QuestionsGood attemptDifficulty
201952 to 3Moderate
201852 to 3Moderate
2017

CAT reading comprehension: Economics

The Reading Comprehension passages in CAT question paper also include economics as a topic:

Passages on this topic can include topics like demand, supply, production, consumption, and the inter-relation between them. The Reading Comprehensions for CAT question paper are either idea-driven or data-driven. Once you have a passage in front of you, the first aim should be to understand what the author wants to convey. 

It is always advisable to skim through the passage in the first chance to understand the basic story-line of the passage. One might skip the data and values given in this chance. The next reading, when one is comfortable with the passage length and basic idea, should be the in-depth one. 

Reading the questions before reading the passage will help the student to find the correct answers quickly and efficiently.

CAT Questions & other MBA entrance exams | CAT Verbal Questions: Economics:

The word ‘anarchy’ comes from the Greek anarkhia, meaning contrary to authority or without a ruler, and was used in a derogatory sense until 1840, when it was adopted by Pierre-Joseph Proudhon to describe his political and social ideology. Proudhon argued that organization without government was both possible and desirable. In the evolution of political ideas, anarchism can be seen as an ultimate projection of both liberalism and socialism, and the differing strands of anarchist thought can be related to their emphasis on one or the other of these.

Historically, anarchism arose not only as an explanation of the gulf between the rich and the poor in any community, and of the reason why the poor have been obliged to fight for their share of a common inheritance, but as a radical answer to the question ‘What went wrong?’ that followed the ultimate outcome of the French Revolution. It had ended not only with a reign of terror and the emergence of a newly rich ruling caste, but with a new adored emperor, Napoleon Bonaparte, strutting through his conquered territories.

The anarchists and their precursors were unique on the political Left in affirming that workers and peasants, grasping the chance that arose to bring an end to centuries of exploitation and tyranny, were inevitably betrayed by the new class of politicians, whose first priority was to reestablish a centralized state power. After every revolutionary uprising, usually won at a heavy cost for ordinary populations, the new rulers had no hesitation in applying violence and terror, a secret police, and a professional army to maintain their control.

For anarchists the state itself is the enemy, and they have applied the same interpretation to the outcome of every revolution of the 19th and 20th centuries. This is not merely because every state keeps a watchful and sometimes punitive eye on its dissidents, but because every state protects the privileges of the powerful.

The mainstream of anarchist propaganda for more than a century has been anarchistcommunism, which argues that property in land, natural resources, and the means of production should be held in mutual control by local communities, federating for innumerable joint purposes with other communes. It differs from state socialism in opposing the concept of any central authority. Some anarchists prefer to distinguish between anarchist-communism and collectivist anarchism in order to stress the obviously desirable freedom of an individual or family to possess the resources needed for living, while not implying the right to own the resources needed by others. . . .

There are, unsurprisingly, several traditions of individualist anarchism, one of them deriving from the ‘conscious egoism’ of the German writer Max Stirner (1806–56), and another from a remarkable series of 19th-century American figures who argued that in protecting our own autonomy and associating with others for common advantages, we are promoting the good of all. These thinkers differed from free-market liberals in their absolute mistrust of American capitalism, and in their emphasis on mutualism.

                                                                                                                                                                                   [CAT 2020 Slot 1]

Q 1: Which one of the following best expresses the similarity between American individualist anarchists and free-market liberals as well as the difference between the former and the latter?

A.  Both reject the regulatory power of the state; but the former favour a people’s state, while the latter favour state intervention in markets.

B.  Both prioritise individual autonomy; but the former also emphasise mutual dependence, while the latter do not do so.

C.  Both are sophisticated arguments for capitalism; but the former argue for a morally upright capitalism, while the latter argue that the market is the only morality.

D.  Both are founded on the moral principles of altruism; but the latter conceive of the market as a force too mystical for the former to comprehend.

Answer:
 
1. Individualist anarchism, according to the last paragraph, involves “protecting our own
autonomy and associating with others for common advantages”. The last line of the passage states that these thinkers “differed from free-market liberals in their absolute mistrust of American capitalism, and in their emphasis on mutualism.” In other words, while both individualist anarchists and free-market thinkers agreed on the importance of individual autonomy, individualist anarchists distrusted capitalism and put emphasis on mutualism while free-market thinkers did not.
All other options mention ideas like state intervention in markets, morally upright capitalism and altrusim which are not discussed in the passage.
The question is “Which one of the following best expresses the similarity between American individualist anarchists and free-market liberals as well as the difference between the former and the latter?”
Hence, the answer is, “Both prioritise individual autonomy; but the former also emphasise mutual dependence, while the latter do not do so.”
Q 2: The author makes all of the following arguments in the passage, EXCEPT:
A. Individualist anarchism is actually constituted of many streams, all of which focus on the autonomy of the individual.
B. The popular perception of anarchism as espousing lawlessness and violence comes from a mainstream mistrust of collectivism.
C. For anarchists, the state is the enemy because all states apply violence and terror to maintain their control.
D. The failure of the French Revolution was because of its betrayal by the new class of politicians who emerged from it.
Answer:
 
2. The passage makes no mention of the mainstream mistrust of collectivism.
In the last paragraph, the passage states that “there are, unsurprisingly, several traditions of individualist anarchism..”. So, option A is true.
Option C is true, based on paragraphs 3 and 4: “For anarchists the state itself is the enemy….because
every state keeps a watchful and sometimes punitive eye on its dissidents..”. Paragraph 3 talks about the “violence and terror” applied by centralised state power.
Option D is also true, based on paragraphs 2 and 3: French Revolution “had ended not only with a reign of terror and the emergence of a newly rich ruling caste” and “workers and peasants, grasping the chance that arose to bring an end to centuries of exploitation and tyranny, were inevitably betrayed by the new class of politicians…”.
The question is “The author makes all of the following arguments in the passage, EXCEPT:”
Hence, the answer is, “The popular perception of anarchism as espousing lawlessness and violence comes from a mainstream mistrust of collectivism.”
Q 3: According to the passage, what is the one idea that is common to all forms of anarchism?
A. There is no idea common to all forms of anarchism; that is why it is anarchic.
B. They all focus on the primacy of the power of the individual.
C. They all derive from the work of Pierre-Joseph Proudhon.
D. They are all opposed to the centralisation of power in the state.
3. The passage clearly states that “for anarchists the state itself is the enemy and they have applied the same interpretation to the outcome of every revolution of the 19th and 20th centuries.”.
Note that option B is incorrect because it talks of the ‘primacy’ of the individual while anarchism puts emphasis on mutualism.
The question is “According to the passage, what is the one idea that is common to all forms of anarchism?”
Hence, the answer is, “They are all opposed to the centralization of power in the state.”
 

 

Q 4: Of the following sets of concepts, identify the set that is conceptually closest to the concerns of the passage.
A. Anarchism, Betrayal, Power, State.
B. Revolution, State, Strike, Egoism.
C. Revolution, State, Protection, Liberals.
D. Anarchism, State, Individual, Freedom.
4. Only options A and D mention anarchism, which is the main idea of the passage. Option A does not mention ‘freedom’ and individual’, which are discussed in the last two paragraphs. So, D is the best choice.
The question is “Of the following sets of concepts, identify the set that is conceptually closest to the concerns of the passage.”
Hence, the answer is, “Anarchism, State, Individual, Freedom.”

Preparation Phase for RC on Economics:

For the understanding of the candidate, preparation has been divided into 3 levels:

Level 1:

  • The basic step towards understanding Reading comprehension passages and cracking them is developing a reading habit. The candidate can read anything they like: Novel, newspaper, course books, movie reviews etc.
  • At least read three articles per week so that you are comfortable with reading complex and lengthy paragraphs as well. Use MBAP CAT E-book (Concept theory) study material for practicing RCs on Economics. This exercise will also cause you to develop the ability to skim through the article and find relevant facts easily.

Level 2:

  • Once you have developed a reading habit, start reading topics specific to the ones that could be asked in the CAT paper.
  • Reading the editorials of the newspapers can help the student to familiarize with the concepts on which the passages could be based.
  • Students should also time themselves to check how many words they can read per minute. A score of 300 words per minute is good but understanding while reading is also of prime importance and should not be neglected. Watch MBAP live lecture Recording (Basic). Candidates can also find some examples in MBAP Previous year CAT question paper.

Level 3:

  • Once the students cross above two levels, they are ready to solve the CAT question papers from the previous years.
  • Also, it is very important to solve different types of passages i.e. around different topics. They can find out tough reading comprehension passages for CAT in the verbal ability and reading comprehension section from MBAP CAT E-book (Practice Questions). Hence, the more a student does reading comprehension practice, the more will be his chances of scoring high.

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