2023 CSAT — Q22

Locate. This asks for the best-supported inference: find the entailed inference. The passage: good corporate governance provides accountability and control; it “enhances access to external financing… leading to greater investment, higher growth and employment”; investors place funds where disclosure, accurate reporting, and equal treatment “are met.” The chain runs governance → investor confidence/access → the firm is trusted.

Test (find-the-line-then-match + direction check). (b) “good corporate governance improves the credibility of the firms” is exactly the entailment: if investors fund firms that meet governance standards, then good governance makes a firm credible to investors. Check direction on the others: (c) “international capital markets ensure firms maintain good governance” reverses the arrow — the passage says governance drives market access, not that markets enforce governance; (a) “it is an important agenda of countries” imports a national-agenda entity the passage never asserts; (d) “robust supply chains” adds an entity nowhere in the text.

Eliminate by anatomy. (c) gets the direction backwards — direction flipped (markets→governance vs governance→access); (a) is too strong and a claim the passage never makes — “agenda of countries” overreaches the passage’s firm-level claim; (d) is a claim the passage never makes — supply chains are never mentioned. The transferable rule on best-inference questions: track the direction of the passage’s causal chain; the plant is usually the same relation run backwards. Key: (b).

“Effective corporate governance enhances access to external financing by firms, leading to greater investment, higher growth and employment. Investors look to place their funds where the standards of disclosure, of timely and accurate financial reporting, and of equal treatment to all stakeholders are met.” Governance → trust/access of investors → the firm is more credible: the logical inference is that good governance improves firms’ credibility — exactly (b). (c) reverses the direction (markets ensure governance); (a) over-attributes to “countries’ agenda”; (d) adds the supply-chain entity → (b).

The passage’s causal chain: effective governance → enhanced access to external financing → investment, growth, employment; and investors choose firms meeting disclosure/reporting/fair-treatment standards. The inference: good governance makes a firm credible to investors.

(b) states this directly. (c) reverses it — the passage does not say capital markets ensure governance; governance is the cause, market access the effect. (a) elevates it to a “countries’ agenda,” beyond the firm-level claim. (d) introduces supply chains, absent from the passage.

Answer: (b).

The decisive test is direction. The passage runs governance → financing → growth, and (c) is that exact chain reversed (markets → governance). On best-inference items with a causal passage, the direction-reversal distractor is the most seductive because it uses all the right nouns. (b) keeps the arrow pointing the passage’s way: governance produces the investor trust that makes a firm credible. Reading the direction, not just the vocabulary, is the move. (b).