Multi-Source Reasoning - Multiple Choice

Incorrect.

While the phrase initial reductions is part of a discussion on the early stages of economic decline, the author indicates that consumer and business reactions follow the phase of initial reductions, so the intent is not to describe consumer and business reactions as the main influence of initial economic downturn.

Correct!

The author mentions initial reduction in relation to the Real Business Cycle theory to begin a discussion of what the theory argues, which in this case is that the initial reduction of economic productive capacity is the initial factor in economic downturn.

Incorrect.

Although the passage as a whole discusses a variety of factors that can cause or perpetuate economic decline, the role of initial reduction is specifically mentioned in a discussion of Real Business Cycle theory.

Incorrect.

While Real Business Cycle theory does discuss consumer reactions, the mention of initial reductions has to do with the first phase of economic downturn, which is related to a reduction in economic productive capacity, which is then followed by considerations regarding consumer reactions.

Incorrect.

Even though the passage indicates that there are many factors that contributed to the economic downturn of Country A, the function of this phrase is specifically in relation to one theory, the Real Business Cycle, so the role of this phrase is connected specifically to this argument.