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A law passed in Rockville three years ago allows a 30% tax [#permalink]
 10 Jul 2011, 12:50
Question Stats:
58% (01:51) correct
41% (01:12) wrong based on 1 sessions
A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes. Which of the following must be true if the above conclusion is to be properly drawn? New house sales are directly tied to personal income. New house sales cannot increase by more than 6% next year. If the tax credit had been 50%, there would have been a larger increase in new house sales Without the tax credit, new house sales would not have been significantly lower. Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.
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Re: CR - Assumption 700 level [#permalink]
10 Jul 2011, 13:14
bschool83 wrote: A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes.
Which of the following must be true if the above conclusion is to be properly drawn?
New house sales are directly tied to personal income.
New house sales cannot increase by more than 6% next year.
If the tax credit had been 50%, there would have been a larger increase in new house sales
Without the tax credit, new house sales would not have been significantly lower.
Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases. D it is we need an answer that says the drop wouldn't have been even worse without the tax credit
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Re: CR - Assumption 700 level [#permalink]
13 Jul 2011, 07:21
I say D. The author is assuming that without the tax credit, the sales would have been similar, not worse than the sales figure now.
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Re: CR - Assumption 700 level [#permalink]
14 Jul 2011, 00:53
Can some one please explain why E is incorrect?
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Re: CR - Assumption 700 level [#permalink]
20 Jul 2011, 22:22
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A law passed in Rockville three years ago allows a 30% tax credit to consumers who purchase a newly constructed home. The tax credit was intended to stimulate the local economy by creating a higher demand for new houses and spurring the creation of jobs in construction and design. However, since the law was passed, the growth in sales of newly constructed homes has dropped each year, from 15% to 10% to 5%. Obviously, this law has had little or no effect on the sale of newly constructed homes.
Which of the following must be true if the above conclusion is to be properly drawn?
New house sales are directly tied to personal income.
New house sales cannot increase by more than 6% next year.
If the tax credit had been 50%, there would have been a larger increase in new house sales
Without the tax credit, new house sales would not have been significantly lower.
[b]Addresses the conclusion assuming that decrease would not have been sharp if this was not the case
Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.
Answer should be clearly D
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Re: CR - Assumption 700 level [#permalink]
20 Jul 2011, 22:43
zuberahmed wrote: Can some one please explain why E is incorrect? E - Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases.If we negate, tax credits are usually effective in influencing consumers. It doesn't hurt the argument. Key word here is usually. In reality, it's neither here nor there (is that a GMAT SC-type correct idiom? I haven't gotten there yet hehe). Sure, tax credits are usually effective, but maybe here they are or are not. D- Without the tax credit, new house sales would not have been significantly lower.If we negate, new house sales would be significantly lower without the tax credit. The argument breaks down and the law has an equally significant effect. Thus, this is the correct answer. It must be true if the above conclusion is to be properly drawn.
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GMAT Day: Nov. 19, 2011
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Re: CR - Assumption 700 level [#permalink]
23 Jul 2011, 01:57
zuberahmed wrote: Can some one please explain why E is incorrect? Tax credits for specific purchases are usually ineffective in influencing consumers to make those purchases. This statement has no bearing on the conclusion which is : Obviously, this law has had little or no effect on the sale of newly constructed homes. But I believe if the assumption was :Tax credits for specific purchases are usually effective in influencing consumers to make those purchases. It might be an assumption, because if you negate it, the argument may fail if change effective back to ineffective. My answer was D as well.
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Re: CR - Assumption 700 level [#permalink]
23 Jul 2011, 13:43
I chose E as well...stupid assumption questions lol. Whats the source?
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Re: CR - Assumption 700 level
[#permalink]
23 Jul 2011, 13:43
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