I think its C.
the governments assumption is that the individual taxpayers are going to put more money into retirement savings. C weakens that assumption


Business are suffering because of a lack of money available for development loans. To help businesses, the government plans to modify the income-tax structure in order to induce individual taxpapyers to put a larger portion of their incomes into retirement savings accounts, because as more money is deposited in such accounts, more money becomes available to borrowers.

Which of the following, if true, raises the most serious doubt regarding the effectiveness of the government's plan to increase the amount of money available for development loans for businesses?

A. When levels of personal retirement savings increase, consumer borrowing always increase correspondingly -- consumer can be both individual and businesses
B. The increased tax revenue the government would receive as a result of business expansino would not offset the loss in revenue from personal income taxes during the first year of the plan. -- It can be after one year....there is no mention of time constarint anywhere
C. Even with tax incentives, some people will choose not to increase their levels of retirement savingsIf people dont put any more money then the Govt.'s plan failsD. Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules.Nothing related to the Govt.'s plans
E. The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings. Strengthens


What do you think?

I feel its A.

If consumers borrow more, then the money left for development loans remains the same or reduces.

C is not correct, because "some" people may choose not to increase retirements, but some will, hence there will be at least some more money going to the bank to be available for loans.

I'll go for C

I was contemplating between C and D. Never thought the answer will be A. Any perspectives about D will be highly appreciated.
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i will go for C
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+1 for A.

A very good practice question.


Premise 1 : Less money for business loans
Premise 2 : If more money is deposited in retirement account, more money is available to borrowers.

Conclusion: Govt plans to modify tax structure to induce more money in retirement accounts so that more money is avaialable for dev loans for businesses.

Choice A weakens the argument by saying that if more money is deposited in retirement accounts, consumer borrowing increases correspondingly. This means that more money would still not be available for dev loans to businesses.

Crick

A. When savings increase, the number of borrower also increases. So, It still lacks of money for the borrowers.
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C is so attractive that i too fell in its trap
yes guys thanx 4 explaning why A is correct.....
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