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The question is from CAT Parajumbles. CAT exam will have 4~5 questions from Sentence Rearrangement. Solve CAT Questions from Parajumbles to get more practice and 2IIMs CAT questions bank provides you with CAT questions that can help you gear for CAT Exam. .

Question 44: A. A drop in household consumption due to the rise in private debt was a key driver of the recession in the U.S.

B. Indeed, the lack of regulatory control over the growth in credit as well as the flow of credit into real estate was the issue.

C. A crucial aspect of the 2008 financial crisis was the build-up of debt in households and in non-financial firms.

D. This, however, is not to negate the view that regulatory failure was the principal cause of the crisis.

  1. ADCB
  2. ACDB
  3. CABD
  4. CADB

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Explanatory Answer

Method of solving this CAT Question from Sentence Rearrangement:

For the first sentence of the paragraph, we have two contenders—A and C. Both these sentences relate to debt build-up in households during the financial crisis. Of these, C is more general, and talks of the build-up of debt in households and in non-financial firms as "a crucial aspect" of the 2008 financial crisis. Sentence A carries this idea forward—the rise in private debt led to a drop in household consumption, which, in turn, was a key driver of the recession. So, A follows C.

Both B and D relate to the lack of regulatory control during the crisis. D states that regulatory failure was the principal cause of the crisis. B adds to this, stating that there are two aspects to this regulatory failure—(a) the lack of regulatory control over the growth in credit, and (b) the lack of regulatory control over flow of credit into real estate. So, B follows D.

The flow of ideas from A to D is also smooth. While a drop in household consumption resulted in recession, there is no doubt that regulatory failure was the principal cause of the crisis.

CADB is the right order.

The question is " Arrange the sentences in the correct order "
The order is CADB

Hence, the answer is CADB

Choice C is the correct answer.


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