2024 CSAT — Q4

Locate. An assumption is unstated, so find the passage’s argument first: as inflation rises, governments spend freely; higher interest rates are supposed to force austerity, but without fiscal backup monetary policy loses traction, and higher rates can themselves become inflationary by pushing governments to borrow more for debt-service. The argument is about the interaction of monetary and fiscal policy, not a single cause.

Test (the three-boundary check). Statement 1 says fiscal policy is “solely responsible” for higher prices. The passage’s own mechanism for inflation is the interest-rate/borrowing/debt-service loop — a channel, with monetary and fiscal policy entangled. “Solely” strengthens the passage’s hedged, multi-factor picture into a single-cause certainty — the certainty check fails → invalid. (Negation confirms: “fiscal policy is not solely responsible” leaves the passage intact — indeed the passage half-blames the rate dynamics.) Statement 2 introduces “long-term government bonds,” a noun the passage never uses — it brings in a thing the passage never names → invalid. There is no line about bonds to assume anything about.

Eliminate by anatomy. (a)/(c) admit Statement 1 — the passage’s caution flipped into certainty: “solely” against a passage that describes a multi-channel interaction. (b)/(c) admit Statement 2, a claim the passage never actually makes — a financial instrument the passage never raises. The transferable rule: “solely/only” almost always over-strengthens an economics passage that describes interacting forces, and a noun absent from the text cannot anchor an assumption. Key: (d).

Statement 1: the passage says “Higher interest rates become inflationary, not disinflationary, because they simply lead governments to borrow more to pay rising debt-service costs” — inflation runs through the interest-rate/borrowing channel, so naming fiscal policy the SOLE cause crosses the QUALIFIER boundary (“solely”). Statement 2: “long-term government bonds” are never mentioned in the passage at all — the ENTITY boundary is crossed. Both invalid → (d).

The passage’s argument: inflation + free government spending → higher interest rates meant to discipline budgets → but without fiscal backup, monetary policy fails, and high rates can be inflationary by forcing more borrowing for debt-service.

Statement 1 — fiscal policy is solely responsible for higher prices. The passage assigns the inflationary push to the interest-rate/borrowing/debt-service mechanism and the failure of monetary policy without fiscal backup — an interacting account, not a sole cause. “Solely” overshoots it. Negate the statement (fiscal policy is not the only cause) and the passage stands. Invalid (qualifier over-strengthened).

Statement 2 — higher prices do not affect long-term government bonds. The passage never mentions long-term government bonds. With no textual entity to anchor it, the statement cannot be a premise the argument leans on. Negate it and nothing in the passage changes. Invalid (adds an entity outside the text).

Neither is assumed. Answer: (d) Neither 1 nor 2.

Two different failures sit side by side here, which is what makes (d) the clean key: an over-strengthened qualifier (“solely”) and an out-of-text thing (“long-term government bonds”). On a valid-assumption question like this, the reflexes are (i) distrust “solely/only/always” against a passage that describes interacting causes, and (ii) refuse any statement whose key noun you cannot find in the text. Both fire — neither statement is the unstated premise the argument needs.