The link between sentences A and B is the reference to lower wages/remuneration in each. Sentence A states that inflation “is assumed to trick workers into accepting a lower remuneration” and calls inflation “an indirect wage cut that helps prevent an increase in unemployment”. That is, an increase in inflation prevents an increase in unemployment. Sentence B too refers to wages, noting that they are inflexible in a market economy. Unemployment goes up when there is a situation where workers have to accept lower wages. A follows B. Wages are inflexible. Unemployment goes up when wages have to be reduced. However, inflation tricks workers into accepting lower wages for their services, thereby preventing an increase in unemployment. Now, sentence C declares any effort to micromanage the economy as a “fool’s errand”, based on two points. One, that the stagflation of the 1970s proved that both high unemployment and high inflation can co-exist. Two, wages may not be as rigid as many economists assume. The ideas put forth in sentence C do not seem to relate to sentences B and A, both of which refer to inflation as a possible means of preventing an increase in unemployment. Sentence D, on the other hand, talks of “this inverse relationship” which central banks keep in mind while framing monetary policies. BAD makes a cogent paragraph. Sentence C is the one to be eliminated. Correct Answer: Choice (C)
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