ParadoxDiff: Hard

Logic Breakdown

Passage Summary: When a big mall opens, people spend a ton of money there, but the town's overall economy doesn't grow nearly as much as you'd expect from all that shopping.

Reasoning: The passage notes a discrepancy: large malls generate massive economic activity, yet the net increase to the local economy is disproportionately small.

Analysis: The paradox here is the gap between 'gross' mall activity and 'net' local growth. To resolve this, we need a reason why that mall money isn't actually 'new' money for the town. Look for an answer that suggests the mall is simply cannibalizing sales from older local businesses or that the profits are being funneled out of the community to a corporate headquarters elsewhere. It's the economic equivalent of moving money from your left pocket to your right pocket and wondering why you aren't suddenly a millionaire.

Passage Stimulus

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17.

Which one of the following, if true, most helps to explain the discrepancy described above?

Correct Answer
D
If most mall spending would have happened elsewhere in the same community anyway, then the mall’s large sales mostly replace existing local spending. That neatly explains why the net local increase is much smaller than the mall’s total economic activity.
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