RC: Business and Economics - 5 | Verbal Ability (VA) & Reading Comprehension (RC) - CAT PDF Download

Passage 

Direction: The passage below is accompanied by a set of questions. Choose the best answer to each question.
Agricultural progress provided the stimulus necessary to set off economic expansion in medieval France. As long as those who worked the land were barely able to ensure their own subsistence necessary to support life) and that of their landlords, all other activities had to be minimal, but when food surpluses increased, it became possible to release more people for governmental, commercial, religious and cultural pursuits.
However, not all the funds from the agricultural surplus were actually available for commercial investment. Much of the surplus, in the form of food increases, probably went to raise the subsistence level; an additional amount, in the form of currency gained from the sale of food, went into the royal treasury to be used in waging war. 
Although Louis VII of France levied a less crushing tax burden on his subjects than did England’s Henry II, Louis VII did spend great sums on an unsuccessful crusade, and his vassals—both lay and ecclesiastic—took over spending where their sovereign stopped. Surplus funds were claimed both by the Church and by feudal landholders, whereupon cathedrals and castles mushroomed throughout France.
The simultaneous progress of cathedral building and, for instance, vineyard expansion in Bordeaux illustrates the very real competition for available capital between the Church and commercial interests; the former produced inestimable moral and artistic riches, but the latter had a stronger immediate impact upon gross national product. Moreover, though all wars by definition are defensive, the frequent crossings of armies that lived off the land and impartially burned all the huts and barns on their path consumed considerable resources.
Since demands on the agricultural surplus would have varied from year to year , we cannot precisely calculate their impact on the commercial growth of medieval France. But we must bear that impact in mind when estimating the assets that were likely to have been available for investment. No doubt castle and cathedral building was not totally barren of profit , and it produced intangible dividends of material and moral satisfaction for the community. 
Even wars handed back a fragment of what they took, at least to a few. Still, we cannot place on the same plane a primarily destructive activity and a constructive one, nor expect the same results from a new bell tower as from a new water mill . Above all, medieval France had little room for investment over and above the preservation of life. 
Granted that war cost much less than it does today, that the Church rendered all sorts of educational and recreational services that were unobtainable elsewhere, and that government was far less demanding than is the modern state—nevertheless, for medieval men and women, supporting commercial development required considerable economic sacrifice.
Q1: According to the passage, agricultural revenues in excess of the amount needed for subsistence were used by medieval kings to
(a) patronize the arts
(b) sponsor public recreation
(c) wage war
(d) build cathedrals
(e) fund public education

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Q2: According to the passage, which of the following was an important source of revenue in medieval France?
(a) Cheese
(b) Wine
(c) Wool
(d) Olive oil
(e) Veal

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Q3: It can be inferred from the passage that more people could enter government and the Church in medieval France because
(a) The number of individual landholdings in heavily agricultural areas was beginning to increase
(b) An increase in the volume of international trade had brought an increase in the population of cities
(c) A decrease in warfare had allowed the king to decrease the size of the army
(d) Food producers could grow more food than they and their families needed to survive
(e) Landlords were prospering and thus were demanding a smaller percentage of tenants’ annual yields

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Q4: The author implies that the reason we cannot expect the same results from a new bell tower as from a new water mill is that
(a) Bell towers yield an intangible dividend
(b) Bell towers provide material satisfaction
(c) Water mills cost more to build than bell towers
(d) Water mills divert funds from commerce
(e) Water mills might well be destroyed by war

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Q5: The author of the passage most probably bases his central argument on which of the following theoretical assumptions often made by economists?
(a) Different people should be taxed in proportion to the benefit they can expect to receive from public activity.
(b) Perfect competition exists only in the case where no farmer, merchant, or laborer controls a large enough share of the total market to influence market price.
(c) A population wealthy enough to cut back its rate of consumption can funnel the resulting savings into the creation of capital.
(d) A full-employment economy must always, to produce one good, give up producing another good.
(e) There is a universal tendency for population, unless checked by food supply, to increase in a geometric progression.

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