PARAGRAPH COMPLETION :- Normally, falling oil prices would boost global…
2024
PARAGRAPH COMPLETION :-
Normally, falling oil prices would boost global growth. This time, though, matters are less clear cut. The big economic question is whether lower prices reflect weak demand or have been caused by a surge in the supply of crude. If weak demand is the culprit, that is worrying: it suggests the oil price is a symptom of weakening growth. If the source of weakness is financial (debt overhangs and so on), then cheaper oil may not boost growth all that much: consumers may simply use the gains to pay down their debts. Indeed, in some countries, cheaper oil may even make matters worse by increasing the risk of deflation.
- A.
An energy-induced drop in prices, though good for consumer purchasing power, risks reinforcing expectations of lower inflation overall; it is part of the threat’s pernicious nature that such expectations easily become self-fulfilling.
- B.
The International Energy Agency, an oil importers’ club, said it expects global demand to rise by just 700,000 barrels a day (b/d) this year, 200,000 b/d below its forecast only last month.
- C.
On balance, energy consumers win and energy producers and exporting countries lose with falling oil prices.
- D.
On the other hand, if plentiful supply is driving prices down, that is potentially better news: cheaper oil should eventually boost spending in the world’s biggest economies.
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Correct answer: D
Correct completion: On the other hand, if plentiful supply is driving prices down, that is potentially better news: cheaper oil should eventually boost spending in the world’s biggest economies.
Why this completes the paragraph:
Paragraph structure: The passage sets up two possible causes of lower oil prices — weak demand or a surge in supply — and discusses the weak-demand case first. The best concluding sentence must address the supply-driven case to complete that contrast.
Fit of the chosen sentence: The sentence about plentiful supply directly addresses the alternative scenario and explains its likely effect (boosting spending), so it logically follows and completes the argument.
Why the other candidate sentences do not work:
The sentence about lower prices reinforcing expectations of lower inflation explains the deflation risk discussed earlier, but it only develops the weak-demand/deflation side and does not address the supply-driven alternative.
The sentence giving an International Energy Agency forecast is a specific statistic and does not follow logically from the two-way contrast the paragraph has set up; it is irrelevant as the concluding sentence.
The general statement that consumers win and producers lose is a tangential summary and does not resolve whether the price fall reflects weak demand or a supply surge, so it does not complete the paragraph's argument.
Conclusion: The sentence that explains the supply-driven outcome best completes the paragraph because it balances the earlier discussion of weak demand with the alternative explanation and its implications for growth.