The silver lining of the Eurozone crisis? Compared to $11 trillion, student loans seem trifling. Click here for the explanation.
Situation: The gap between global debt and income is growing precipitously, and in order to prevent another economic meltdown, European nations need to stabilize their fiscal debt.
Reasoning: To solve an assumption question, you need to find the central idea that forms the backbone of the argument. We should focus on the fact that fiscal policies and fiscal deficits are two different things.
(A) Incorrect: The assumption behind the argument is that stabilizing the European fiscal deficit will prevent another meltdown. The assumption that the European fiscal deficit is at an all-time is not needed to make the argument above.
(B) Incorrect: Such an assumption has to do with fiscal policies and not fiscal deficit. It does not explain the connection between the European fiscal deficit and global economic meltdown.
(C) Incorrect: The level of fiscal debt as compared to other nations does not explain the link between fiscal debt and economic meltdown.
(D) Incorrect: This answer choice is a possible explanation of Europe’s fiscal situation, but it says nothing about the link between Europe’s fiscal debt and the larger economic situation.
(E) Correct: The argument rests on the assumption that the European fiscal deficit is linked to the larger global economic climate and that managing the European fiscal deficit will stymie another global meltdown.