Hi Ron, Stacey,
Can u pls help me here. How do I attack this problem. This looks like a formal reasoning problem?
thanks
-Vittal

Neither a rising standard of living nor balanced trade, by itself, establishes a country's ability to compete in the international marketplace. Both are required simultaneously since standards of living can rise because of growing trade deficits and trade can be balanced by means of a decline in country's standard of living.

If the the facts stated in the passage above are true,a proper test of a country's ability to be competitive is its ability to

a) balance its trade while its standard of living rises
b) balance its trace while its standard of living falls
c) increase trade deficits while its standard of living rises
d) decrease trade deficits while its standard of living falls
e) keep its standard of living constant while trade deficits rise.

the correct is "(a) balance its trade while its standard of living rises", isn't it ?

Best way to Solve this problem is if you diagram it and once you have done that it becomes very simple.
In the paragraph we are told Balance Trade and rising standard of living are required to compete in the international marketplace. This is our conclusion.
Second Sentence explains
Standard of Living "UP" Trade Deficit "UP"
Standard of Living "Down" Trade can be balanced
Based on above we know “A” is the right answer

yes.

this is one of the few passages on which they actually tell you, more or less explicitly, the correct answer; the primary challenge is to piece together the antecedent of the word both in the second sentence.

i.e., the second sentence of the passage says "both are required simultaneously". once you figure out what this is referring to, you've got it.