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Canadians now increasingly engage in out shopping, which is

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Canadians now increasingly engage in out shopping, which is [#permalink] New post 30 Apr 2013, 13:06
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66% (02:15) correct 33% (01:29) wrong based on 15 sessions
Canadians now increasingly engage in “out shopping,” which is shopping across the national border, where prices are lower. Prices are lower outside of Canada in large part because the goods-and-services tax that pays for Canadian social services is not applied.

Which one of the following is best supported on the basis of the information above?

(A) If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate.
(B) If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses.
(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing.
(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada.
(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.

[Reveal] Spoiler:
Let's discuss A and C


Edit: carcass

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Re: Canadians [#permalink] New post 30 Apr 2013, 14:37
CharuKapoor wrote:
Canadians now increasingly engage in “out shopping,” which is shopping across the national border, where prices are lower. Prices are lower outside of Canada in large part because the goods-and-services tax that pays for Canadian social servicesis not applied.

Which one of the following is best supported on the basis of the information above?

(A) If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate.
(B) If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses.
(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing.
(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada.
(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.

[Reveal] Spoiler:
Let's discuss A and C


IMO, A is correct.
I think KEY here is: tax that pays for Canadian social services ==> taxes that government collects will be paid for social services ==> If revenue from taxes reduces, but costs for social services are not reduced ==> government must increase taxes to offset the loss.

Consider each answer:

(A) If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate.
Correct.

(B) If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses.
Wrong. No information about reciprocal tariff.

(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing.
Wrong. The stimulus does not say the costs for social services increase.

(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada.
Wrong. Nothing about good bands.

(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.
Wrong. No information about import taxes.

Waiting for OA.
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Re: Canadians now increasingly engage in “out shopping,” which [#permalink] New post 30 Apr 2013, 21:00
IMO A

Social Services are paid through goods-and-services tax(GST).
GST = Sales *X%.
If Social Services stay the same and amount of Sales decreases - the only way to pay for social services is to increase the % charged.
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Re: Canadians now increasingly engage in “out shopping,” which [#permalink] New post 01 May 2013, 02:06
(A) If the upward trend in out-shopping continues at a significant level and the amounts paid by the government for Canadian social services are maintained, the Canadian goods-and-services tax will be assessed at a higher rate.
A continued trend in out-shopping means that lesser people will pay Canadian goods-and-services tax which will mean that government has to increase tax rate to be able to pay for the Canadian social services.
This falls within the boundaries of what is given in the premise and hence is the correct answer.
However there is an assumption here that the amount of shopping inside Canada has not increased enough to counter the out-shopping. I am going with this choice considering that the author has mentioned significant level for out-shopping. Also no other choice is even close to being correct.

(B) If Canada imposes a substantial tariff on the goods bought across the border, a reciprocal tariff on cross-border shopping in the other direction will be imposed, thereby harming Canadian businesses.
Nothing is given about taxes on other side so we shouldn't assume anything

(C) The amounts the Canadian government pays out to those who provide social services to Canadians are increasing.
The amounts provided for social services may increase because of increase in population or many other reasons and out shopping has nothing to do with it.

(D) The same brands of goods are available to Canadian shoppers across the border as are available in Canada.
Taking about Brand is out of scope.

(E) Out-shopping purchases are subject to Canadian taxes when the purchaser crosses the border to bring them into Canada.
Again out of scope. Nothing mentioned about the taxes on buying across the border.
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Re: Canadians now increasingly engage in “out shopping,” which   [#permalink] 01 May 2013, 02:06
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