Free Practice Question
CR · Critical Reasoning
505-555
Resolve a Paradox
In troubled economic times, there is a shift in business from mainstream retail stores to discount retail stores as consumers aim to reduce their total monthly spending. For local discount stores, when unemployment rises or effective wages decline due to inflation or another cause, sales go up. By contrast, however, during periods of extreme economic hardship, business at discount stores stops improving and may even suffer.
Which of the following, if true, does most to explain the contrast described above?
Which of the following, if true, does most to explain the contrast described above?
Answer Choices
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During extreme economic hardship, businesses that are located near discount stores and which also cater to lower spending levels also suffer.
B
The lower overall levels of consumer spending are, the more discount stores will benefit.
C
When discount stores flourish, they may be able to hire additional staff and raise effective wages.
D
During extreme economic hardship, consumers may continue to reduce total spending even after they have shifted their purchases to the most economic outlets available.
E
Except during periods of extreme economic hardship, discount stores tend to thrive more in economies benefiting from a direct economic stimulus, which increases spending cash.
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Difficulty
505-555
Type
CR