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Reading Comprehension: Application Questions

The author is most likely to agree with which of the following statements about the price of gold?

Great!

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We know that the prices of gold and diamonds behave similarly. Therefore, if diamond producers could stabilize the price of diamonds, gold producers can do the same despite the economic conditions. 

Incorrect.

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We know that gold and diamonds react similarly to economic conditions. Since diamond producers could act to stabilize the price of diamonds, we can infer that gold producers can do the same.

Incorrect.

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We know that the prices of gold and diamonds react similarly to economic conditions. That does not mean that the prices themselves are similar, but that their ratio roughly stayed the same over time.

Incorrect.

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The author only tells us that the price of gold fluctuates with economic conditions; he or she do not mention whether it is a direct or inverse correlation. There is an answer choice with which the author would surely agree - look for it!

Incorrect.

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Since the price of gold fluctuates with economic conditions, if the economy stagnates the price of gold should do the same.

Gold producers can do little to affect the prices of their product as it is determined by the relative scarcity or abundance of gold.
Historically, the prices of gold and diamonds have been similar.
Current rises in the price of gold may be linked to the overall slowdown of the economy.
The current rise in the price of gold will continue indefinitely even if the economy stagnates.
Given the current economic slump, prices of gold will decline unless drastic measures are taken by gold producers.