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đ Authentic CAT Reading Comprehension Passage: Practice with a real RC passage from a previous CAT exam.
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Detailed Questions with Step-by-Step Solutions: Each question is explained thoroughly for better understanding.
đ In-Depth Passage Analysis: Gain insights through line-by-line and paragraph-wise analysis, supplemented with a quick summary table for efficient revision.
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RC Passage
Direction for the questions 5 to 8: The passage below is accompanied by a set of four questions. Choose the best answer to each question.
Oftentimes, when economists cross borders, they are less interested in learning from others than in invading their garden plots. Gary Becker, for instance, pioneered the idea of human capital. To do so, he famously tackled topics like crime and domesticity, applying methods honed in the study of markets to domains of nonmarket life. He projected economics outward into new realms: for example, by revealing the extent to which humans calculate marginal utilities when choosing their spouses or stealing from neighbors. At the same time, he did not let other ways of thinking enter his own economic realm: for example, he did not borrow from anthropology or history or let observations of nonmarket economics inform his homo economicus. Becker was a picture of the imperial economist in the heyday of the disciplineâs bravura.
Times have changed for the once almighty discipline. Economics has been taken to task, within and beyond its ramparts. Some economists have reached out, imported, borrowed, and collaboratedâbeen less imperial, more open. Consider Thomas Piketty and his outreach to historians. The booming field of behavioral economicsâthe fusion of economics and social psychologyâis another case. Having spawned active subfields, like judgment, decision making and a turn to experimentation, the field aims to go beyond the caricature of Rational Man to explain how humans make decisionsâŠ.
It is important to underscore how this flips the way we think about economics. For generations, economists have presumed that people have interestsââpreferences,â in the neoclassical argotâthat get revealed in the course of peoplesâ choices. Interests come before actions and determine them. If you are hungry, you buy lunch; if you are cold, you get a sweater. If you only have so much money and canât afford to deal with both your growling stomach and your shivering, which need you choose to meet using your scarce savings reveals your preference.
Psychologists take one look at this simple formulation and shake their heads. Increasingly, even some mainstream economists have to admit that homo economicus doesnât always behave like the textbook maximizer; irrational behavior canât simply be waved away as extraeconomic expressions of passions over interests, and thus the domain of other disciplinesâŠ. This is one place where the humanist can help the economist. If narrative economics is going to help us understand how rivals duke it out, who wins and who loses, we are going to need much more than lessons from epidemiological studies of viruses or intracranial stimuli.
Above all, we need politics and institutions. Shiller [the Nobel prize winning economist] connects perceptions of narratives to changes in behavior and thence to social outcomes. He completes a circle that was key to behavioral economics and brings in storytelling to make sense of how perceptions get framed. This cycle (perception to behavior to society) was once mediated or dominated by institutions: the political parties, lobby groups, and media organizations that played a vital role in legitimating, representing, and excluding interests. Yet institutions have been stripped from Shillerâs account, to reveal a bare dynamic of emotions and economics, without the intermediating place of politics.
RC Line-wise Explanation
𧩠Part 1: Line-wise Explanation for the Passage
Paragraph 1
Line 1: âOftentimes, when economists cross borders, they are less interested in learning from others than in invading their garden plots.â
Explanation: Economists, when engaging with other disciplines, tend to impose their own ideas rather than learn from the perspectives of others.
Line 2: âGary Becker, for instance, pioneered the idea of human capital.â
Explanation: Gary Becker was an economist known for introducing the concept of human capital.
Line 3: âTo do so, he famously tackled topics like crime and domesticity, applying methods honed in the study of markets to domains of nonmarket life.â
Explanation: He explored issues like crime and family life using market-based economic techniques, even though these areas are not typically market-driven.
Line 4: âHe projected economics outward into new realms: for example, by revealing the extent to which humans calculate marginal utilities when choosing their spouses or stealing from neighbors.â
Explanation: Becker expanded economic thinking into personal and moral decisions, suggesting people subconsciously evaluate benefits and costs even in intimate or criminal actions.
Line 5: âAt the same time, he did not let other ways of thinking enter his own economic realm: for example, he did not borrow from anthropology or history or let observations of nonmarket economics inform his homo economicus.â
Explanation: While Becker applied economics broadly, he did not incorporate ideas from other fields like history or anthropology into his economic models.
Line 6: âBecker was a picture of the imperial economist in the heyday of the disciplineâs bravura.â
Explanation: Becker exemplified the dominant, assertive style of economists during a time when economics was highly confident and expansionist.
Paragraph 2
Line 1: âTimes have changed for the once almighty discipline.â
Explanation: Economics no longer holds the unquestioned dominance it once did.
Line 2: âEconomics has been taken to task, within and beyond its ramparts.â
Explanation: Critics both inside and outside the economics community have challenged its ideas and approaches.
Line 3: âSome economists have reached out, imported, borrowed, and collaboratedâbeen less imperial, more open.â
Explanation: Modern economists are more open to engaging with other disciplines and sharing ideas, unlike the old one-sided approach.
Line 4: âConsider Thomas Piketty and his outreach to historians.â
Explanation: An example is economist Thomas Piketty, who collaborates with historians.
Line 5: âThe booming field of behavioral economicsâthe fusion of economics and social psychologyâis another case.â
Explanation: Behavioral economics, which blends psychology and economics, also reflects this collaborative trend.
Line 6: âHaving spawned active subfields, like judgment, decision making and a turn to experimentation, the field aims to go beyond the caricature of Rational Man to explain how humans make decisionsâŠ.â
Explanation: Behavioral economics has developed new areas focusing on how people really make decisions, moving past the simplified idea of always-rational individuals.
Paragraph 3
Line 1: âIt is important to underscore how this flips the way we think about economics.â
Explanation: This new approach significantly changes the traditional understanding of economics.
Line 2: âFor generations, economists have presumed that people have interestsâ'preferences,' in the neoclassical argotâthat get revealed in the course of peoplesâ choices.â
Explanation: Traditionally, economists believed people have fixed preferences that are shown through the choices they make.
Line 3: âInterests come before actions and determine them.â
Explanation: According to this view, peopleâs actions are driven by their pre-existing interests.
Line 4: âIf you are hungry, you buy lunch; if you are cold, you get a sweater.â
Explanation: Examples of this theory: basic needs dictate straightforward actions.
Line 5: âIf you only have so much money and canât afford to deal with both your growling stomach and your shivering, which need you choose to meet using your scarce savings reveals your preference.â
Explanation: When forced to choose between two needs due to limited money, your choice shows what you value more.
Paragraph 4
Line 1: âPsychologists take one look at this simple formulation and shake their heads.â
Explanation: Psychologists often disagree with this overly simplistic economic model of human behavior.
Line 2: âIncreasingly, even some mainstream economists have to admit that homo economicus doesnât always behave like the textbook maximizer;â
Explanation: Even traditional economists now recognize that real people donât always act as rational, utility-maximizing agents.
Line 3: âirrational behavior canât simply be waved away as extraeconomic expressions of passions over interests, and thus the domain of other disciplinesâŠ.â
Explanation: Irrational behavior shouldnât just be dismissed as irrelevant to economics or left to other fields like psychology.
Line 4: âThis is one place where the humanist can help the economist.â
Explanation: Here, insights from the humanities can help improve economic understanding.
Line 5: âIf narrative economics is going to help us understand how rivals duke it out, who wins and who loses, we are going to need much more than lessons from epidemiological studies of viruses or intracranial stimuli.â
Explanation: To make sense of economic conflicts and outcomes, we need more than just data from scienceâwe need narrative and context.
Paragraph 5
Line 1: âAbove all, we need politics and institutions.â
Explanation: Politics and institutions are essential components for understanding economics.
Line 2: âShiller [the Nobel prize winning economist] connects perceptions of narratives to changes in behavior and thence to social outcomes.â
Explanation: Shiller links the way people perceive stories to their behavior and the broader impact on society.
Line 3: âHe completes a circle that was key to behavioral economics and brings in storytelling to make sense of how perceptions get framed.â
Explanation: He ties storytelling into behavioral economics to explain how people form perceptions.
Line 4: âThis cycle (perception to behavior to society) was once mediated or dominated by institutions: the political parties, lobby groups, and media organizations that played a vital role in legitimating, representing, and excluding interests.â
Explanation: In the past, institutions like parties and media shaped public perception and societal outcomes.
Line 5: âYet institutions have been stripped from Shillerâs account, to reveal a bare dynamic of emotions and economics, without the intermediating place of politics.â
Explanation: Shillerâs model lacks the political and institutional layers that traditionally influenced this cycle, reducing the analysis to just emotions and economics.
RC Paragraph Explanation
Paragraph 1 Summary
This paragraph critiques how economists like Gary Becker expanded economic thinking into nonmarket areas while ignoring insights from other disciplines. Becker is portrayed as a symbol of economic imperialism, applying market logic broadly but without openness to interdisciplinary perspectives.
Paragraph 2 Summary
Economics is no longer the dominant discipline it once was and is becoming more collaborative. The paragraph highlights the rise of behavioral economics and cross-disciplinary work, like that of Piketty, as signs of a more open and diversified approach.
Paragraph 3 Summary
The traditional economic view assumes that people act based on fixed preferences revealed through their choices. This paragraph explains this framework with examples and lays the foundation for questioning its validity.
Paragraph 4 Summary
This paragraph challenges the classical model of rational choice by introducing critiques from psychologists and humanists. It argues that real human behavior often deviates from economic assumptions and that understanding these deviations requires more narrative and contextual tools.
Paragraph 5 Summary
The final paragraph emphasizes the importance of politics and institutions in shaping economic outcomes. While Shiller introduces storytelling to explain behavior, his model omits institutional mediators, leaving a simplified view of the emotion-economy relationship.
RC Quick Table Summary
| Paragraph Number | Main Idea |
|---|---|
| Paragraph 1 | Economists like Becker imposed economics on other fields but ignored their insights. |
| Paragraph 2 | Modern economics is more open, embracing interdisciplinary approaches. |
| Paragraph 3 | Traditional economics assumes choices reflect pre-existing preferences. |
| Paragraph 4 | Critics argue this model is too simplistic; real behavior needs narrative context. |
| Paragraph 5 | Politics and institutions are crucial, but often missing from modern economic models. |
RC Questions
Ques 5.We can infer from the passage that the term 'âhomo economicusâ refers to someone who
Detailed explanation by Wordpandit: The passage defines homo economicus as a theoretical model used in classical economics to explain human behavior. According to this view, individuals have fixed preferences and make rational choices that reveal those preferences through actions. This is best illustrated by the example of a person choosing between food and a sweater depending on their needs and budget. The emphasis is on calculated decision-making grounded in self-interest and utility maximization, characteristic of rational economic actors.
Option-by-Option Analysis:
Option A: The passage doesnât explore whether or not homo economicus considers other people's preferences. It focuses on the individual's own preferences being revealed through their actions, not on social influences. Option B: This is the opposite of what the passage says. The economic model of homo economicus, especially as portrayed through Gary Beckerâs approach, is noted for not borrowing from other disciplines. Collaboration is described as a more recent development in the field. Option C: The passage explicitly states that *homo economicus* makes choices based on internal preferencesâbuying lunch if hungry, for exampleâthus demonstrating rational, preference-driven behavior. Option D: Although the passage notes that economics has been extended into nonmarket domains, it does not define homo economicus as maximizing opportunities in those spaces. The focus remains on decision-making within the rational framework, not on the types of domains.
Ques 6.âTimes have changed for the once almighty discipline.â We can infer from this statement and the associated paragraph that the author is being
Detailed explanation by Wordpandit: The phrase âonce almighty disciplineâ is a rhetorical cue suggesting that economics was once dominant and self-confidentâalmost to a fault. This is supported by the portrayal of earlier economists like Becker, who were described as imperial, applying economic logic to other domains while resisting outside perspectives. In contrast, newer trendsâsuch as behavioral economics and collaborations with historiansâhighlight a move toward openness. The tone implies mild sarcasm about the disciplineâs previous insularity and a recognition of its evolving nature.
Option-by-Option Analysis:
Option A: The author's use of "once almighty" carries a slightly mocking tone, pointing out that economists who once resisted outside influences are now engaging more with other disciplines. This change is described not with condemnation, but with a touch of irony. Option B: While the passage discusses interdisciplinary borrowing, it does not attribute this to a failure in predicting market behavior. Thatâs an added assumption not supported by the text. Option C: There's no suggestion that economics as a discipline has collapsed or been discredited. The author is tracing an evolution in its orientation, not a downfall. Option D: The author seems supportive of the shift toward collaboration, contrasting it favorably with earlier isolationism. There is no criticism of interdisciplinary work.
Ques 7. The author critiques Schillerâs approach to behavioural economics for
Detailed explanation by Wordpandit: The passage praises Robert Shiller for integrating storytelling and perceptions into economic models, building on behavioral economics. However, it criticizes him for leaving out the role of institutionsâlike political parties and mediaâwhich historically mediated between perceptions, behaviors, and societal outcomes. By removing these intermediaries, Shillerâs framework is seen as over-simplifying the complex mechanisms through which economic behavior is shaped.
Option-by-Option Analysis:
Option A: The passage does not suggest that media and politics are marginal influences. In fact, it asserts the oppositeâthat they once played a vital role in shaping outcomes. Option B: The author is not accusing Shiller of denigrating or attacking institutions. Rather, the issue is omissionânot condemnation. Option C: This accurately reflects the critique: Shiller connects emotions to economic outcomes but omits the mediating influence of political and institutional frameworks. Option D: While Shiller incorporates storytelling, the author does not criticize this. The issue lies in what is missingâinstitutionsânot in what he includes.
Ques 8. In the first paragraph the author is making the point that economists like Becker
Detailed explanation by Wordpandit: Gary Becker is portrayed as someone who extended economic analysis into domains like crime and family lifeâareas typically considered nonmarket. However, the author emphasizes that Beckerâs approach was one-sided: he applied economic reasoning to new subjects but did not incorporate insights from other fields such as anthropology or history. This underscores a lack of intellectual exchange, with Becker projecting economics outward while keeping external perspectives at bay.
Option-by-Option Analysis:
Option A: While Becker did apply economic principles broadly, the passage does not state that he benefitted from this. The focus is on his imperial stance, not on outcomes. Option B: This reverses the reality presented. Becker did not borrow from other disciplines, nor does the passage claim that he discouraged others from using economic methods. Option C: This accurately captures the authorâs depiction: Becker extended economics into other areas without integrating outside perspectives, showing the unidirectional nature of his approach. Option D: The passage does not suggest Becker actively defended economics from intrusion. It characterizes him as insular, not defensive.
