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ECONOMICS

Lesson III

As you may already know, economics is the study of the myriad decisions that are involved in the way that goods and services are produced, distributed, and consumed in a society. A solid understanding of economics will not only help you take the GED® test, but also assist you in navigating the business world of modern American society. 

In this lesson, we are going to discuss a few different test-taking skills within the context of economics. We will focus on the following four techniques:

    1. Identifying opposites
    2. Smart skimming
    3. Eliminating extraneous information
    4. Figuring out technical terminology

Identifying opposites:

Within the format of the GED® exam, it is a helpful tip to remember that answer choices that provide you with direct opposites are most often correct. For example, the passage you are given to read will most likely establish a specific relationship (e.g., when the supply of a good goes up, the price of the good goes down). Don’t get confused with answer choices that are contradictions to what the question itself is asking. These are not the kinds of opposites we are talking about.

Skill Exercise: Determining Opposites


Read the following question and choose one of the answer choices from the list below:

Which is the most likely explanation for why Medical Illustrators have lower wages than Dental Hygienists?

          1.      There is less demand for medical illustrators.

          2.      There are many more dental hygienists than medical illustrators.

                 illustrators

          3.      Medical illustration is a dangerous job.

          4.      There is more demand for medical illustrators.

Answer: We can eliminate Answer 3 immediately, as it is counter-intuitive. If the job were dangerous, it would limit the number of people who could fill the job of medical illustrator, and therefore the people who took the job would be paid more. We can also eliminate Answer 2 because it does not address the demand for people to fill the job compared to the supply; it simply states the number of people in the profession.

Within the framework of supply and demand, we know that if there was a surplus of one type of labor, that type would be paid less. Therefore, we can strike Answer 3. This leaves us with Answers 1 and 4, which are opposites. Referring to the reasoning we used to eliminate Answer 3, we know that if there is more demand for labor (more supply is needed), then pay would be paid higher. Therefore, we can eliminate Answer 4, leaving Answer 1 as the correct answer. Medical illustrators are paid less because there is less demand for that specific kind of labor.

Skill Exercise: Smart Skimming

Skimming is a productive skill to have as long as you use it correctly. Sometimes, when presented with a long passage, it is a better idea to skim the passage, focusing on the topic sentences (at the beginning and end of each paragraph) to gain a larger understanding of the content of the passage, and then seeing what the questions at the end are asking of you. If you choose not to skim, that’s fine, though you may end up being pressed for time that skimming conserves.

Another trick to productive skimming is the process of finding key words as you skim. For example, if your question asks, “Why did Peter’s corner store run out of milk?” when you look over the passages provided, look for the word “milk”; you will most likely expedite finding the answer in comparison to re-reading the entire passage. If, however, the question isn’t worded as directly as the example above and you cannot find the key word in the passage, look for a general idea or words that correspond to that idea. In the example above, you could look for “need”, “consumption”, “distribution”, “cost”, “loss”, or any combination of these words that would relate to a lack of milk supply.   

It’s even easier to skim for numbers or dates because they visually stand out from the words of the text. If your question asks, “How much milk did Peter order before he ran out?” skim the passage, lighting upon any numerical reference in the text. Because there may be multiple reasons to reference numbers in the text, never simply write it down. After you find the number, read the sentence that precedes it and that follows to see if it is the number you are looking for. This is smart skimming.

Skim the following passage by reading the first and last sentences of each paragraph, then review the questions and try to find the best answer choice below:

     According to Adam Smith, author of The Wealth of Nations, the anticipation of increasing profit from "improving one's stock of capital" lies in the right to private property and the belief that property rights encourage the property holders to develop the property, to create wealth, and to allocate resources in a resourceful manner based on the operation of the market. This concept is central to capitalism. From this developed the modern conception of property as a right that is enforced by positive law, with the expectation that this would increase wealth and raise standards of living.

     Contrary to the concept of private property as a right, socialism's fundamental principles state that the cost of defending property is higher than the returns from private property ownership. While property rights promote the property-holder to develop his property and generate wealth, he will only do so for his own personal gain, which may not coincide with the benefit of other people or society at large.

     Communism takes the side of the socialist ideal and extends it to argue that only collective ownership through a polity (an organized society, not necessarily a state), will be able to assure fewer unequal or unjust outcomes and maximize benefits for society at large. Therefore all, or almost all, private property should be abolished.

Choose the answer that best summarizes the entire passage:

1. Contrary to Adam Smith’s belief that private property ownership encourages an overall generation of wealth, both communist and socialist ideals uphold the notion that the wealth generated by private property is detrimental to society at large.

2. Similar to Adam Smith’s belief that private property ownership encourages an overall generation of wealth, both communist and socialist ideals uphold the notion that the wealth generated by private property will be properly allocated to society at large.

3. Communist ideology states that private property should be abolished in order to maximize societal benefits.

4. Socialism’s fundamental ideals state that the cost of upholding private property ownership is too high for the rest of the non-property holding society.

Answer: While Answers 3 and 4 are correct, they do not summarize the passage. If you read the first and last sentences of the three paragraphs, you would know that the correct answer would need to include reference to Adam Smith (or current capitalist property laws), socialism and communism in order to provide a complete summary. This leaves us with Answers 1 and 2. From the last sentence in paragraphs 2 and 3, we know that Answer 2 is incorrect, leaving Answer 1 as the correct summary of the passage.

Skill Exercise: Eliminating Invalid Information

Sometimes answer choices will provide you with information that was never even mentioned in the question. Once you verify that this information was not related to the question and that you didn’t simply skip over it, you can eliminate the answer with the extraneous information.

For example, if your question asks, “When is a product surplus most likely to occur?” and your possible answer choices are:

1. When the demand for the product goes up

2. When the demand for the product goes down

3. When the price of the product goes down

4. Whenever Bob buys too much coffee

You can see almost instantly that Answer 4 includes information that wasn’t in the question and sounds a bit ridiculous next to the other choices. As long as Bob and his coffee weren’t the main focus in the reading or visual prompt, you can eliminate this question based on the extraneous information. The correct answer to this question is #2, when demand for the product goes down.  

Do NOT, however, disregard information in the passage as unimportant. Everything in the passage is there for a reason, and if you are answering a question that is not simply testing your comprehension abilities, but perhaps asking you to evaluate or analyze a relationship between two or three seemingly unrelated ideas, it is important to pay attention to all of the information given or you will miss the connection.

Remember that on the GED® test only one answer can be correct unless explicitly stated in the directions for the question. Because of this, it’s important to watch out for similarly worded answer choices that are there expressly to trip you up. If two answers really do mean the same thing, then you can eliminate BOTH of them, because you cannot have two correct answers. Make sure that they do actually mean the same thing before eliminating them, and not that they just sound the same.

Skill Exercise: What to Skip and What to Examine

Examine the following chart and refer to the answer choices below:

Percentage of the Labor Force Unemployed

Year

Unemployment

1929

3.2 %

1933

24.9 %

1937

14.3 %

1941

9.9 %

1943

1.9 %

1988

5.5 %

1992

7.5 %

2000

4.1 %

Source: U.S. Department of Commerce

According to the above table, in what year was unemployment at its worst?

1.      1943

2.      1933

3.      1981

4.      1937

Answer: Using the methodology of eliminating invalid information, the first choice we can eliminate is #3, which suggests a date that is not included in the chart. While unemployment may have been at its worst in 1981 (though most likely not), it is not contextually relevant and should be eliminated. Next, we can see that unemployment was actually at its best in 1943, so we can eliminate answer #1. This leaves us with either 1933 or 1937, and after checking the chart we see that while unemployment was bad in 1937, it was definitely at its worst in 1933 at 24.9%. Therefore, the correct answer is #2, 1933.

Skill Exercise: Seeing through technical terminology:

Often when reading a passage on economics or analyzing a chart or graph, it can be easy to get lost on technical terms that you are not familiar with. Remember that you do not need to master the information being given to you, but only develop a general understanding of what is going on. Frequently, the difficult information is not necessary to understand the question that you are being asked. Remember that this is a timed exam, and you should not waste a lot of time on something that you do not understand. Remember to use common sense and deductive reasoning when presented with a technical question, and skim when appropriate!

Read the following question and refer to the answers below:

In 2004, it cost $4.50 to buy a comic book that cost $2.25 in 1994. Which economic condition does this illustrate?

1.      Recession

2.      Inflation

3.      Depression

4.      Expansion

5.      Contraction

Answer: Even if you never learned the actual meaning of these words and therefore are unsure of the answer to the question, there’s an easy way to break down terms to understand their basic meaning. Think about the first part of the words and group them. Recession, depression and contraction can be put in one category because they all have to do with lessening, being decreased or pushed down. Inflation and expansion can be grouped together because they both have to do with growing or increasing (think: inflate like a balloon, expand after eating a meal).

     Referring back to the question, we see that the cost of the comic book has grown or increased, meaning that we can eliminate the entire group that contradicts this. Now we have to choose between #2, inflation and #4, expansion. This is where knowledge of economic terminology would make answering the question a breeze, but you have a better chance of choosing the right answer between 2 choices than between 5! The correct answer is #2, inflation.

Good work this week! Hopefully you're getting increasingly comfortable with the skills we have covered, as well as some of the information that will be similar to what you will find on the actual GED® test. 

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