The economy of Mylta, a south Asian country, is under a slowdown. Currently its GDP growth rate is lowest in four decades. However, the stock market is rising despite the economic slowdown and has reached an all-time high in two years. Which of the following most helps to reconcile the discrepancy described above?
Show answer & explanation
Correct answer: D
Explanation
To resolve the discrepancy between an overall economic slowdown and a rising stock market, we need a reason that explains why the stock market does not reflect the broader economy.
• Option (D): States that the stock market index only tracks the top 30 companies belonging to industries entirely unaffected by the economic slowdown. This clearly explains why the index can reach a high even while the rest of the economy is declining.
• Option (A) would lead to falling stock markets, worsening the contradiction.
• Option (B) is vague and does not provide whether predictions are positive or negative.
• Option (C) does not explain the disconnect within Mylta's domestic economy.
Therefore, Option (D) correctly reconciles the paradox.