Mock Test 4 for CAT: 68 Questions with Solutions & Analysis

Common Description: The passage below is accompanied by four questions. Based on the passage, choose the best answer for each question
Studies showing that income inequality plays a positive role in economic growth are largely based on three arguments. The first argument focuses on investment indivisibilities wherein large sunk costs are required when implementing new fundamental innovations. Without stock markets and financial institutions to mobilize large sums of money, a high concentration of wealth is needed for individuals to undertake new industrial activities accompanied by high sunk costs . . . [One study] shows the relation between economic growth and income inequality for 45 countries during 1966-1995. [It was found] that the increase in income inequality has a significant positive relationship with economic growth in the short and medium term. Using system GMM, [another study estimated] the relation between income inequality and economic growth for 106 countries during 1965- 2005 period. The results show that income inequality has a positive impact on economic growth in the short run, but the two are negatively correlated in the long run. The second argument is related to moral hazard and incentives . . . Because economic performance is determined by the unobservable level of effort that agents make, paying compensations without taking into account the economic performance achieved by individual agents will fail to elicit optimum effort from the agents. Thus, certain income inequalities contribute to growth by enhancing worker motivation . . . and by giving motivation to innovators and entrepreneurs . . . Finally, [another study] point[s] out that the concentration of wealth or stock ownership in relation to corporate governance contributes to growth. If stock ownership is distributed and owned by a large number of shareholders, it is not easy to make quick decisions due to the conflicting interests among shareholders, and this may also cause a free-rider problem in terms of monitoring and supervising managers and workers. . . .
Various studies have examined the relationships between income inequality and economic growth, and most of these assert that a negative correlation exists between the two. . . . Analyzing 159 countries for 1980-2012, they conclude that there exists a negative relation between income inequality and economic growth; when the income share of the richest 20% of population increases by 1%, the GDP decreases by 0.08%, whereas when the income share of the poorest 20% of population increases by 1%, the GDP increases by 0.38%. Some studies find that inequality has a negative impact on growth due to poor human capital accumulation and low fertility rates . . . while [others] point out that inequality creates political instability, resulting in lower investment. . . . [Some economists] argue that widening income inequality has a negative impact on economic growth because it negatively affects social consensus or social capital formation. One important research topic is the correlation between democratization and income redistribution. [Some scholars] explain that social pressure for income redistribution rises as income inequality increases in a democratic society. In other words, when democratization extends suffrage to a wider class of people, the increased political power of low- and middle-income voters results in broader support for income redistribution and social welfare expansion. However . . . if the rich have more political influence than the poor, the democratic system actually worsens income inequality rather than improving it. According to the incentive or moral hazard argument, which one of the designs below is most consistent with the claim that some inequality can raise growth?

Common Description: The passage below is accompanied by four questions. Based on the passage, choose the best answer for each question.
In the summer of 2022, subscribers to the US streaming service HBO MAX were alarmed to discover that dozens of the platform's offerings - from the Covid-themed heist thriller Locked Down to the recent remake of The Witches - had been quietly removed from the service . .. The news seemed like vindication to those who had long warned that streaming was more about controlling access to the cultural commons than expanding it, as did reports (since denied by the show’s creators) that Netflix had begun editing old episodes of Stranger Things to retroactively improve their visual effects.
What's less clear is whether the commonly prescribed cure for these cultural ills - a return to the material pleasures of physical media - is the right one. While the makers of Blu-ray discs claim they have a shelf life of 100 years, such statistics remain largely theoretical until they come to pass, and are dependent on storage conditions, not to mention the continued availability of playback equipment. The humble DVD has already proved far less resilient, with many early releases already beginning to deteriorate in quality Digital movie purchases provide even less security. Any film “bought” on iTunes could disappear if you move to another territory with a different rights agreement and try to redownload it. It’s a bold new frontier in the commodification of art: the birth of the product recall. After a man took to Twitter to bemoan losing access to Cars 2 after moving from Canada to Australia, Apple clarified that users who downloaded films to their devices would retain permanent access to those downloads, even if they relocated to a hemisphere where the [content was] subject to a different set of rights agreements. Thanks to the company’s ironclad digital rights management technology, however, such files cannot be moved or backed up, locking you into watching with your Apple account.
Anyone who does manage to acquire Digital Rights Management free (DRM-free) copies of their favourite films must nonetheless grapple with ever-changing file format standards, not to mention data decay - the gradual process by which electronic information slowly but surely corrupts. Only the regular migration of files from hard drive to hard drive can delay the inevitable, in a sisyphean battle against the ravages of digital time.
In a sense, none of this is new. Charlie Chaplin burned the negative of his 1926 film A Woman of the Sea as a tax write-off. Many more films have been lost through accident, negligence or plain indifference. During a heatwave in July 1937, a Fox film vault in New Jersey burned down, destroying a majority of the silent films produced by the studio.
Back then, at least, cinema was defined by its ephemerality: the sense that a film was as good as gone once it left your local cinema. Today, with film studios keen to stress the breadth of their back catalogues (or to put in Hollywood terms, the value of their IPs), audiences may start to wonder why those same studios seem happy to set the vault alight themselves if it’ll help next quarter's numbers. Which of the following statements is suggested by the sentence “Back then, at least, cinema was defined by its ephemerality: the sense that a film was as good as gone once it left your local cinema”?

Common Description: Instructions [25 - 29]
An air conditioner (AC) company has four dealers - D1, D2, D3 and D4 in a city. It is evaluating sales performances of these dealers. The company sells two variants of ACs - Window and Split. Both these variants can be either Inverter type or Non-inverter type. It is known that of the total number of ACs sold in the city, 25% were of Window variant, while the rest were of Split variant. Among the Inverter ACs sold, 20% were of Window variant.
The following information is also known:
1. Every dealer sold at least two window ACs.
2. D1 sold 13 inverter ACs, while D3 sold 5 Non-inverter ACs.
3. A total of six Window Non-inverter ACs and 36 Split Inverter ACs were sold in the city.
4. The number of Split ACs sold by D1 was twice the number of Window ACs sold by it.
5. D3 and D4 sold an equal number of Window ACs and this number was one-third of the number of similar ACs sold by D2.
6. D2 and D3 were the only ones who sold Window Non-inverter ACs. The number of these ACs sold by D2 was twice the number of these ACs sold by D3.
7. D3 and D4 sold an equal number of Split Inverter ACs. This number was half the number of similar ACs sold by D2. What was the total number of ACs sold by D2 and D4?

Common Description: Aurevia, Brelosia, Cyrenia and Zerathania are four countries with their currencies being Aurels, Brins, Crowns, and Zentars, respectively. The currencies have different exchange values. Crown's currency exchange rate with Zentars = 0.5, i.e., 1 Crown is worth 0.5 Zentars.
Three travelers, Jano, Kira, and Lian set out from Zerathania visiting exactly two of the countries. Each country is visited by exactly two travelers. Each traveler has a unique Flight Cost, which represents the total cost of airfare in traveling to both the countries and back to Zerathania. The Flight Cost of Jano was 4000 Zentars, while that of the other two travelers were 5000 and 6000 Zentars, not necessarily in that order. When visiting a country, a traveler spent either 1000, 2000 or 3000 in the country's local currency. Each traveler had different spends (in the country's local currency) in the two countries he/she visited. Across all the visits, there were exactly two spends of 1000 and exactly one spend of 3000 (in the country's local currency).
The total “Travel Cost” for a traveler is the sum of his/her Flight Cost and the money spent in the countries visited.
The citizens of the four countries with knowledge of these travels made a few observations, with spends measured in their respective local currencies:
i. Aurevia citizen: Jano and Kira visited our country, and their Travel Costs were 3500 and 8000, respectively.
ii. Brelosia citizen: Kira and Lian visited our country, spending 2000 and 3000, respectively. Kira's Travel Cost was 4000.
iii. Cyrenia citizen: Lian visited our country and her Travel Cost was 36000. How many Zentars did Lian spend in the two countries he visited?

Common Description: Instructions [34 - 37]
Comprehension: Over the top (OTT) subscribers of a platform are segregated into three categories: i) Kid, ii) Elder, and iii) Others. Some of the subscribers used one app and the others used multiple apps to access the platform. The figure below shows the percentage of the total number of subscribers in 2023 and 2024 who belong to the ‘Kid’ and ‘Elder’ categories.

The following additional facts are known about the numbers of subscribers.
1. The total number of subscribers increased by 10% from 2023 to 2024.
2. In 2024, 1/2 of the subscribers from the ‘Kid’ category and 2/3 of the subscribers from the ‘Elder’ category subscribers use one app.
3. In 2023, the number of subscribers from the ‘Kid’ category who used multiple apps was the same as the number of subscribers from the ‘Elder’ category who used one app.
4. 10,000 subscribers from the ‘Kid’ category used one app and 15,000 subscribers from the ‘Elder’ category used multiple apps in 2023. How many subscribers belonged to the ‘Others’ category in 2024?

Common Description: Instructions [38 - 42 ]
Two students, Amiya and Ramya are the only candidates in an election for the position of class representative. Students will vote based on the intensity level of Amiya’s and Ramya’s campaigns and the type of campaigns they run. Each campaign is said to have a level of 1 if it is a staid campaign and a level of 2 if it is a vigorous campaign. Campaigns can be of two types, they can either focus on issues, or on attacking the other candidate.
If Amiya and Ramya both run campaigns focusing on issues, then
• The percentage of students voting in the election will be 20 times the sum of the levels of campaigning of the two students. For example, if Amiya and Ramya both run vigorous campaigns, then 20 × (2+2)%, that is, 80% of the students will vote in the election.
• Among voting students, the percentage of votes for each candidate will be proportional to the levels of their campaigns. For example, if Amiya runs a staid (i.e., level 1) campaign while Ramya runs a vigorous (i.e., level 2) campaign, then Amiya will receive 1/3 of the votes cast, and Ramya will receive the other 2/3.
The above-mentioned percentages change as follows if at least one of them runs a campaign attacking their opponent.
• If Amiya runs a campaign attacking Ramya and Ramya runs a campaign focusing on issues, then 10% of the students who would have otherwise voted for Amiya will vote for Ramya, and another 10% who would have otherwise voted for Amiya, will not vote at all.
• If Ramya runs a campaign attacking Amiya and Amiya runs a campaign focusing on issues, then 20% of the students who would have otherwise voted for Ramya will vote for Amiya, and another 5% who would have otherwise voted for Ramya, will not vote at all.
• If both run campaigns attacking each other, then 10% of the students who would have otherwise voted for them had they run campaigns focusing on issues, will not vote at all. If Ramya runs a campaign attacking Amiya, then what is the minimum percentage of votes that she is guaranteed to get?