Section: Verbal

17) Neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace. Both are required simultaneously since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in a country's standard of living.

If the facts stated in the passage above are true, a proper test of a country's ability to be competitive is its ability to

1. keep its standard of living constant while trade deficits rise.
2. balance its trade while its standard of living rises.
3. balance its trade while its standard of living falls.
4. increase trade deficits while its standard of living rises.
5. decrease trade deficits while its standard of living falls.
6. No Answer Selected

The passage states that a country capable of competing in the international marketplace must balance trade while its standard of living rises. In view of this information, a proper test of a country's ability to compete in the international marketplace will establish that both of these conditions are met simultaneously. Choice 2 describes a test that does.