Complex financial institutions develop in communities where residents require diverse services that individual households or businesses cannot indepen...
GMAT Information and Ideas : (Ideas) Questions
Complex financial institutions develop in communities where residents require diverse services that individual households or businesses cannot independently provide. Despite this principle, early business economists concluded that rural agricultural regions would rarely develop such institutions. This conclusion stemmed from their misinterpretation of rural economic structures and their serious undervaluation of rural economic complexity, causing them to assume that ______
Which choice most logically completes the text?
rural residents would prefer to travel to urban centers for most specialized financial services.
financial institutions wouldn't offer rural communities services substantially different from those residents could access independently.
agricultural regions would develop financial institutions only after reaching certain population thresholds.
rural financial institutions would focus exclusively on agricultural loans and basic banking services.
Step 1: Decode and Map the Passage
Part A: Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| "Complex financial institutions develop in communities where residents require diverse services that individual households or businesses cannot independently provide." |
|
| "Despite this principle, early business economists concluded that rural agricultural regions would rarely develop such institutions." |
|
| "This conclusion stemmed from their misinterpretation of rural economic structures and their serious undervaluation of rural economic complexity," |
|
| "causing them to assume that ______" |
|
Part B: Passage Architecture & Core Elements
Main Point: Early business economists wrongly concluded that rural areas wouldn't develop complex financial institutions due to their fundamental misunderstanding and undervaluation of rural economic complexity.
Argument Flow: The passage establishes a principle about when complex financial institutions develop, then shows how early economists reached a contradictory conclusion about rural areas. It explains this contradiction resulted from their flawed understanding, leading to a specific assumption that we need to identify.
Step 2: Interpret the Question Precisely
This is a fill-in-the-blank question asking us to choose the best logical connector. The answer must create the right relationship between what comes before and after the blank.
Step 3: Prethink the Answer
- The economists misunderstood rural economic structures and seriously undervalued rural economic complexity
- This flawed thinking would lead them to assume rural areas are simpler than they actually are
- Specifically, they'd probably assume rural residents don't need the same diverse, complex services that urban residents do - that rural people can handle most things on their own
- The right answer should show the economists assuming rural areas don't need complex financial services because they underestimated how sophisticated rural economic needs actually are
rural residents would prefer to travel to urban centers for most specialized financial services.
✗ Incorrect
- Suggests rural residents would prefer traveling to urban centers for services
- This doesn't connect to undervaluing rural complexity - it's about preference, not capability
financial institutions wouldn't offer rural communities services substantially different from those residents could access independently.
✓ Correct
- States that financial institutions wouldn't offer rural communities services substantially different from what residents could access independently
- Perfectly connects to undervaluing rural complexity - if you think rural economics are simple, you'd assume people can handle most financial needs themselves
agricultural regions would develop financial institutions only after reaching certain population thresholds.
✗ Incorrect
- Focuses on population thresholds for institutional development
- Doesn't address the core issue of undervaluing economic complexity
rural financial institutions would focus exclusively on agricultural loans and basic banking services.
✗ Incorrect
- Suggests rural institutions would focus exclusively on agricultural services
- While this might seem related to rural areas, it doesn't stem from undervaluing complexity