Multi-Source Reasoning - Dichotomous

Correct!

The passage states that between 1987 and 1989, an increase in interest rates restricted consumers' ability to borrow money for purchasing high-price items. Since a boat would be considered an item of high value, it makes logical sense that consumers would have been less likely to purchase boats in these years than in 1986.

Incorrect.

Although the passage does not directly mention the sale of boats, you can logically assume that this kind of purchase would fall into the category of a high-value item. Since consumers were less likely to purchase these items between 1987 and 1989 due to an increase in interest rates, this statement is supported by the information given in the passage.

Incorrect.

The Real Business Cycle theory argues that consumer reactions play a role after initial reductions of the economy's productive capacity. However, in describing the economic downturn, the passage indicates that the stock market crash affected consumer confidence in purchasing high-price items. Since this is mentioned as a catalyst for the crash, it does not support the theory that consumer reactions follow other initial reductions.

Correct!

Although the Real Business Cycle does include consumer reactions, which are mentioned in the description of the economic downturn, the Real Business Cycle theory argues that these reactions follow initial reductions in economic production. However, the description of the crisis indicates that immediately following the stock market crash, consumer confidence declined, meaning that this was the catalyst for the economic downturn.

Incorrect.

Although consumer confidence is mentioned along with an increase in interest rates, there is no indication that one was the result of another. Rather, along with consumer confidence, increased interest rates provided an additional barrier for consumers to purchase high-value items.

Correct!

While consumer confidence and interest rates are both mentioned as reasons why consumers were less likely to purchase high-value items, there is no indication in the passage of a causal relationship between these two factors, so you cannot infer that consumer confidence caused an increase in interest rates.