In the wealth of nations (1776), Scottish economist Adam Smith asserted that the propensity of "truck, barter and exchange" was...
GMAT Reading Comprehension : (RC) Questions
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In the wealth of nations (1776), Scottish economist Adam Smith asserted that the propensity of "truck, barter and exchange" was both the foundation of commerce and a given quality of human nature, driven by individual desire. Smith's view that self-interest dominated the business that emerged in early modern (sixteenth- and seventeenth century) England has had tremendous effects on how such relations have been perceived. Today it is typically assumed, for instance, that the development of business relations weakened the spirit of cooperation that characterized village communities and encouraged a spirit of individualism and self-betterment that ran counter to community interest. However, such a view fails to account for the language that people in early modern England used to articulate their understanding of business relations, language that stressed credit, trust, obligations, and contracts, rather than self-interest. Throughout this period, most business transactions were conducted on credit—of plain dealing and of the keeping of promises —dominated the way in which business relations were conceived. Individual profit and solvency were important, but neither could be achieved without the trust and direct cooperation of one's neighbours. As a result, buying and selling, far from breaking up communities, actually created numerous bonds that held villages together.
Ques. 1/3
The author of the passage refers to "truck, barter and exchange" in the highlighted text most likely in order to
Solution
1. Passage Analysis:
Progressive Passage Analysis
| Text from Passage | Analysis |
|---|---|
| In the wealth of nations (1776), Scottish economist Adam Smith asserted that the propensity of "truck, barter and exchange" was both the foundation of commerce and a given quality of human nature, driven by individual desire. | What it says: Adam Smith believed that trading/exchanging goods was the basis of business AND was natural human behavior motivated by personal wants. What it does: Introduces a historical economist's theory about commerce and human nature. Source/Type: Historical claim by a named economist (Adam Smith, 1776). Connection to Previous Sentences: This is the opening sentence - establishes our starting point. What We Know So Far: Smith's theory links commerce to individual self-interest What We Don't Know Yet: Whether this view is correct, what the author thinks, what actually happened in early modern England Visualization: Think of Smith saying: "Humans naturally want to trade (like: I'll give you 3 apples for 1 loaf of bread) because each person wants to benefit themselves." Reading Strategy Insight: Note this is just ONE person's view from 1776 - don't assume it's fact yet. |
| Smith's view that self-interest dominated the business that emerged in early modern (sixteenth- and seventeenth century) England has had tremendous effects on how such relations have been perceived. | What it says: Smith's belief about self-interest controlling business in 1500s-1600s England has greatly influenced how people think about business relationships even today. What it does: Shows the lasting impact of Smith's theory on modern thinking. Source/Type: Author's observation about the influence of Smith's ideas. Connection to Previous Sentences: This builds on sentence 1 by showing that Smith's "individual desire" theory didn't just stay in 1776 - it shaped how we think about business today. Visualization: Smith's 1776 idea → influenced thinking for 250+ years → shapes how we view business relationships today Reading Strategy Insight: The phrase "has had tremendous effects" suggests we're about to learn what those effects are - stay tuned! |
| Today it is typically assumed, for instance, that the development of business relations weakened the spirit of cooperation that characterized village communities and encouraged a spirit of individualism and self-betterment that ran counter to community interest. | What it says: Because of Smith's influence, people today believe that business development destroyed community cooperation and promoted selfish individualism that hurt communities. What it does: Provides a specific example of how Smith's ideas influence modern assumptions. Source/Type: Current widespread belief ("typically assumed") Connection to Previous Sentences: This gives us the concrete example of the "tremendous effects" mentioned in sentence 2. Smith's self-interest theory → modern assumption that business = bad for communities. Visualization: Old villages: People cooperating, helping neighbors Business development arrives Result (according to modern assumption): People become selfish, community spirit dies Reading Strategy Insight: The word "assumed" is key - this might not be true! Authors often present assumptions before challenging them. |
| However, such a view fails to account for the language that people in early modern England used to articulate their understanding of business relations, language that stressed credit, trust, obligations, and contracts, rather than self-interest. | What it says: BUT this modern view is wrong because it ignores how people in 1500s-1600s England actually talked about business - they emphasized trust and obligations, NOT self-interest. What it does: Introduces the author's counter-argument using historical evidence. Source/Type: Author's argument based on historical language evidence. Connection to Previous Sentences: This directly challenges everything we've heard so far! - Sentences 1-3: Smith's self-interest theory and its influence - NOW Sentence 4: Historical evidence suggests Smith was wrong What We Know So Far: There's a conflict between Smith's theory and actual historical evidence What We Don't Know Yet: More details about how business actually worked Visualization: Smith's Theory: "Business = self-interest" vs. Actual Historical Language: "credit, trust, obligations, contracts" Reading Strategy Insight: The word "However" signals the author's main argument is starting - this is where the passage gets clearer, not more complex! |
| Throughout this period, most business transactions were conducted on credit—of plain dealing and of the keeping of promises —dominated the way in which business relations were conceived. | What it says: During the 1500s-1600s, most business was done on credit (pay later), and the concepts of honest dealing and keeping promises controlled how people thought about business. What it does: Provides specific evidence supporting the counter-argument from sentence 4. Source/Type: Historical fact about business practices. Connection to Previous Sentences: This builds on sentence 4 by giving concrete examples: - Sentence 4 said: language stressed "trust" and "obligations" - NOW Sentence 5: Shows this through "credit," "plain dealing," and "keeping promises" Visualization: Typical 1600s business transaction: Farmer to Merchant: "I'll take 50 pounds of grain now, I'll pay you next month after harvest" Merchant: "Agreed, because I trust you to keep your promise" (No money changes hands immediately - relationship is based on trust) Reading Strategy Insight: Feel relieved here - this is giving us concrete examples of the "trust" concept, not introducing new complexity! |
| Individual profit and solvency were important, but neither could be achieved without the trust and direct cooperation of one's neighbours. | What it says: Yes, personal profit and staying financially stable mattered, but you couldn't achieve either without trusting and cooperating with your neighbors. What it does: Acknowledges that self-interest existed BUT shows it required community cooperation. Source/Type: Author's analysis of historical business relationships. Connection to Previous Sentences: This beautifully connects and simplifies our understanding: - We're not saying profit didn't matter (acknowledging Smith wasn't completely wrong) - BUT profit required community cooperation (supporting the trust/cooperation argument) Visualization: Business Success in 1600s England: Individual Profit (what Smith focused on) + Community Trust & Cooperation = Actual Success Individual Profit alone = Failure Reading Strategy Insight: This sentence shows the author is being balanced - not completely dismissing Smith, but showing his view was incomplete. |
| As a result, buying and selling, far from breaking up communities, actually created numerous bonds that held villages together. | What it says: Therefore, business activity didn't destroy communities - it actually created connections that strengthened villages. What it does: Provides the final conclusion that directly contradicts the modern assumption from sentence 3. Source/Type: Author's conclusion based on the historical evidence presented. Connection to Previous Sentences: This is the perfect conclusion that ties everything together: - Sentence 3: Modern assumption = "business weakened community cooperation" - Sentences 4-6: Historical evidence of trust, credit, cooperation - NOW Sentence 7: Conclusion = business actually STRENGTHENED communities What We Know Now: Complete argument that Smith's individualistic view was wrong, and business in early modern England actually required and created community bonds. Visualization: Modern Assumption: Business → Community Breakdown Historical Reality: Business → More Community Bonds → Stronger Villages Reading Strategy Insight: This is the "spiral" effect - we've come full circle with a clear, simple conclusion that resolves the complexity introduced earlier. You should feel MORE confident about understanding the passage now, not less! |
2. Passage Summary:
Author's Purpose:
To challenge a widely accepted theory about business history by showing that actual historical evidence contradicts common assumptions about how business affected communities in early modern England.
Summary of Passage Structure:
The author builds their argument by systematically dismantling a famous economic theory:
- First, the author introduces Adam Smith's influential 1776 theory that business is driven by individual self-interest and personal gain.
- Next, they explain how Smith's ideas have shaped modern thinking, leading people today to assume that business development destroyed community cooperation and promoted harmful individualism.
- Then, they present their counter-argument by pointing to historical evidence that people in early modern England actually talked about business using language focused on trust, credit, and obligations rather than self-interest.
- Finally, they provide specific examples of how business required community cooperation and conclude that business actually strengthened village communities instead of weakening them.
Main Point:
Contrary to Adam Smith's theory and modern assumptions, business in early modern England was based on trust and community cooperation rather than pure self-interest, and actually created stronger bonds between neighbors rather than breaking communities apart.
Question Analysis:
The question asks why the author refers to "truck, barter and exchange" in the passage. This is a purpose question that requires us to understand the author's intent in quoting these specific terms.
Connecting to Our Passage Analysis:
From our passage analysis, we know that:
- The phrase "truck, barter and exchange" appears in the very first sentence as part of Adam Smith's assertion
- The passage analysis shows this is introducing "a historical economist's theory about commerce and human nature"
- The phrase is presented as Smith's own terminology from "The Wealth of Nations" (1776)
- The author is setting up Smith's view before challenging it later in the passage
Prethinking:
The author mentions "truck, barter and exchange" specifically because these are the exact terms Adam Smith used to describe what he believed was fundamental to commerce. The author is being precise in representing Smith's original language before proceeding to critique Smith's broader theory. This isn't the author's own description of business activities, but rather a direct reference to Smith's specific terminology.
Answer Choices Explained
A
lend authority to the argument that commerce is characterized by self-interest
Why It's Wrong:
- The author is not trying to support Smith's argument about self-interest - the passage actually challenges Smith's view
- The phrase appears as part of Smith's assertion, not as the author's endorsement
- The entire passage structure shows the author disagreeing with Smith's self-interest theory
Common Student Mistakes:
- Thinking the author agrees with Smith because they quote him?
→ Remember that authors often present opposing views before refuting them - Confusing quoting someone's terms with supporting their argument?
→ Look at the overall passage structure to see if the author ultimately agrees or disagrees
B
identify activities that embody essential qualities of human relationships
Why It's Wrong:
- These terms represent Smith's view of commerce, not general human relationships
- The context is specifically about business and economic activity, not broader human interactions
- Smith's focus was on commercial behavior, not relationship qualities in general
Common Student Mistakes:
- Taking the phrase out of its commercial context?
→ Always consider the specific context in which quoted material appears - Generalizing beyond what the passage actually discusses?
→ Stay focused on the passage's actual scope - business relations, not all human relationships
C
indicate the terms Adam Smith used to define business relations
Why It's Right:
- The passage explicitly states these are terms from Smith's "The Wealth of Nations" (1776)
- The author is precisely representing Smith's original terminology before critiquing his theory
- This fits the passage structure of presenting Smith's view before challenging it
Key Evidence: "Scottish economist Adam Smith asserted that the propensity of 'truck, barter and exchange' was both the foundation of commerce" - this directly shows the author is identifying Smith's specific terms for defining business relations.
D
represent the everyday speech used in village communities in England
Why It's Wrong:
- These are Adam Smith's formal economic terms from 1776, not everyday village speech
- The passage later discusses actual village language, which emphasized "credit, trust, obligations, and contracts"
- Smith was a Scottish economist writing theory, not recording village conversations
Common Student Mistakes:
- Confusing Smith's theoretical language with actual historical speech?
→ Distinguish between what theorists wrote and what people actually said - Missing that the passage contrasts Smith's terms with actual village language?
→ Notice how the passage shows Smith's language versus the real "language that people in early modern England used"
E
introduces key terms used in credit transactions in early England
Why It's Wrong:
- These terms are from Smith's 1776 economic theory, not from early English credit transactions
- The passage shows that actual credit transaction language involved "trust, obligations, and contracts"
- Smith's terms predate and differ from the historical business language being discussed
Common Student Mistakes:
- Mixing up Smith's theoretical terms with historical business practices?
→ Keep clear the distinction between what Smith theorized versus what actually happened historically - Not noticing the chronological separation between Smith (1776) and early modern England (1500s-1600s)?
→ Pay attention to the different time periods being discussed
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