CAT 2025 Slot 3 VARC Question & Solution
Question
The given sentence is missing in the paragraph below. Decide where it best fits among the options 1, 2, 3, or 4 indicated in the paragraph.
Sentence: Productivity gains, once expected to feed through to broader living standards, now primarily serve to enhance returns to wealth.
Paragraph: Economists now argue that inequality is no longer a by-product of growth but a condition of it. ____ (1) ____. Unlike wages, wealth reflects not just income but also access to assets, favourable institutional conditions - such as low interest rates - and public policies like low taxes and housing shortages. ____ (2) ____. In other words, wealth depends on political choices in ways that income currently does not. It’s not just the inequality itself that is the issue but the erosion of mechanisms that once constrained it. ____ (3) ____. Wealth and income inequality are linked, but where wages have stagnated and collective bargaining has weakened, capital income - derived from profits, rents and interest - has been boosted by design. ____ (4) ____.
Options
Solution
Main Idea of the Paragraph
The paragraph argues that inequality is a structural feature of modern economic growth. It explains that:
- Wealth grows differently from wages because it is shaped by assets, institutions, and policy choices
- Over time, capital income has been deliberately increased
- At the same time, the mechanisms that once limited inequality have weakened
As a result, the gains from economic growth increasingly benefit wealth holders rather than wage earners.
Explanation of the Correct Answer
Why Blank 4 Is the Best Fit
The given sentence fits best at blank 4 because it summarizes and concludes the argument developed just before it.
- The paragraph states that capital income has been “boosted by design” while wages have stagnated
- The sentence explains the outcome of this process:
- Productivity gains now flow mainly to wealth
- Living standards for workers do not rise proportionately
This makes the sentence a natural concluding statement that ties together the paragraph’s key claims.
Why the Other Blanks Do Not Work
-
Blank 1:
- Comes too early
- The paragraph has not yet explained the distinction between wealth and wages, which the sentence assumes
-
Blank 2:
- Would interrupt the explanation of how institutions and policy decisions shape wealth
- Breaks the logical flow of the argument
-
Blank 3:
- Falls at a transition point between explanation and consequence
- Inserting the sentence here would disrupt that transition