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Chief Economist: Usually, the release of economic data about

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Chief Economist: Usually, the release of economic data about [#permalink]

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New post 07 May 2013, 13:24
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Chief Economist: Usually, the release of economic data about higher-than-expected
growth in the Gross Domestic Product (GDP) results in an increase in stock prices.

However, this quarter, the release of data about strong GDP growth is most likely to result in
a decrease rather than an increase in stock prices. Robust GDP growth will lead to higher
interest rates, increasing the attractiveness of bonds and causing a shift of capital from
equity to debt securities.


In the above argument, the statements in boldface play which ofthe following roles?

A) The first acknowledges a consideration against the main conclusion of the chief economist;
the second is that conclusion.
b) The first is a pattern of cause and effect that the chief economist predicts will not hold in the
case at issue; the second offers a consideration in support of that prediction.
c) The first is a generalization that the chief economist accepts as true; the second is a
consequence that follows from that generalization.
d) The first is evidence that the chief economist provides in support of a certain prediction; the
second is that prediction.
e) The first is a pattern of cause and effect that the chief economist predicts will be repeated in
the case at issue; the second acknowledges a circumstance in which that pattern would not
hold.
[Reveal] Spoiler: OA

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Re: Chief Economist: Usually, the release of economic data ab [#permalink]

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New post 07 May 2013, 21:22
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First sentence is a pattern of cause & effect. Second statement is the reason why it will not be true in this quarter.

B is my answer
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Re: Chief Economist: Usually, the release of economic data ab [#permalink]

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New post 07 May 2013, 21:37
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This argument made by the Chief Economist consists of -

1) Cause and effect pattern - First boldface (Premise 1)
2) Conclusion - Non-bold faced line
3) Counter-premise ( Premise 2 )

Chief Economist: Usually, the release of economic data about higher-than-expected
growth in the Gross Domestic Product (GDP) results in an increase in stock prices.

However, this quarter, the release of data about strong GDP growth is most likely to result in
a decrease rather than an increase in stock prices. Robust GDP growth will lead to higher
interest rates, increasing the attractiveness of bonds and causing a shift of capital from
equity to debt securities.


In the above argument, the statements in boldface play which ofthe following roles?

A) The first acknowledges a consideration against the main conclusion of the chief economist;
the second is that conclusion. --> The first is against the main conclusion. But the second is not the conclusion.
b) The first is a pattern of cause and effect that the chief economist predicts will not hold in the
case at issue; the second offers a consideration in support of that prediction. -->This seems correct. Cause-and-effect are mentioned in first boldface whereas the same won't probably hold true due to the second boldface

c) The first is a generalization that the chief economist accepts as true; the second is a
consequence that follows from that generalization.-180 degree opposite answer. If this were true, then the economist won't say that equities would be negatively affected by GDP growth data
d) The first is evidence that the chief economist provides in support of a certain prediction; the
second is that prediction.-False, the first is a pattern which usually is observed. The second is a consideration for another prediction, but it is not the prediction itself.
e) The first is a pattern of cause and effect that the chief economist predicts will be repeated in
the case at issue; the second acknowledges a circumstance in which that pattern would not
hold. False. The entire question is built around the idea that the economist predicts that the pattern won't be repeated.
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Re: Chief Economist: Usually, the release of economic data ab [#permalink]

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New post 07 May 2013, 23:55
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i would also like to go with B ....
Option E presents the opposite of what is reqd..
Second statement is not the conclusion so A is out.
Option D is out coz the first statement is not presented to support any view point.Rather it is presented to give a contrasting view point.
Option C does not presents the correct explanation of the second statement.

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Re: Chief Economist: Usually, the release of economic data ab [#permalink]

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New post 08 May 2013, 00:17
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IMO, B is correct.

The very favorite pattern of GMAC in arguments is "X is good, however, Y is better because Z......"

The pattern in this argument is:

[GDP growth usually results in an increase in stock prices], however, [in this case, GDP growth will result in decrease in stock prices]. Because [Robust GDP growth will lead to higher interest rates, increasing the attractiveness of bonds and causing a shift of capital from equity to debt securities.]

Hence, B is correct.
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Re: Chief Economist: Usually, the release of economic data ab [#permalink]

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New post 08 May 2013, 03:38
OE

Quote:
The chief economist begins his argument by describing the usual relationship of
cause and effect. Thus, the first statement in boldface represents a
generalization that the chief economist accepts as accurate. The economist then
goes on to conclude that this time, however, the usual cause-and-effect
relationship will not hold and strong figures of the GDP will cause a decrease
rather than an increase in stock prices. To support this conclusion, the economist
offers evidence explaining how strong GDP figures may lead to lower stock
prices. Therefore, the second statement in boldface represents evidence that
supports the main conclusion of the economist.

(A) This answer choice correctly describes the role of the first statement but
incorrectly states that the second statement in boldface represents the
conclusion of the economist rather than the evidence that supports that
conclusion. Remember, the conclusion of the economist is that strong GDP
figures will result in a decrease rather than an increase in stock prices.

(B) CORRECT. This answer choice correctly identifies the role of each of the two
parts in boldface. The first part represents a generalization that is typically
accurate but will not be repeated in the case at issue. The second portion
presents evidence in support of the economist’s prediction.

(C) This answer choice correctly describes the role of the first portion but
mistakenly states that the second part in boldface follows from this
generalization. The second statement in boldface presents evidence that
supports the opposite effect from that described in the first portion. Namely, the
economist claims that this time, stock prices will decrease rather than increase,
as would be usual.

(D) This answer choice incorrectly states that the first portion supports rather
than weighs against that economist’s prediction. In addition, this answer choice
incorrectly states that the second portion in boldface represents the economist's
prediction rather than evidence supporting it.

(E) This answer choice incorrectly states that the first statement will be repeated
in the case at issue. Remember, the economist argues that the usual pattern will
not hold this time. The second statement is correctly described as acknowledging
a circumstance in which the usual pattern will not hold.

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Re: Chief Economist: Usually, the release of economic data ab [#permalink]

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New post 08 May 2013, 05:32
Analysis of argument:
1. Chief Economist informs that usually (the standard pattern) the release of economic data about higher-than-expected growth in the Gross Domestic Product (GDP) results in an increase in stock prices.
2. Chief Economist expects (his view) a decrease in stock prices this quarter despite a data with strong GDP growth numbers
3. Chief Economist’s reason for his view: Robust GDP growth will lead to higher
interest rates, increasing the attractiveness of bonds and causing a shift of capital from
equity to debt securities.

Pre thinking:
Chief Economist expects(predicts) stock prices to go down this quarter despite strong GDP growth numbers.
Chief Economist reaches his expectation by assuming that Robust GDP growth will lead to higher interest rates, increasing the attractiveness of bonds and causing a shift of capital from equity to debt securities.
So Chief Economist believes that the usual relationship between stock prices and GDP data will not hold.

Answer choice analysis:
A) The first acknowledges a consideration against the main conclusion of the chief economist;
the second is that conclusion.
Incorrect! Second is not the conclusion but the reason for chief economist to believe what he is predicting.

b) The first is a pattern of cause and effect that the chief economist predicts will not hold in the
case at issue; the second offers a consideration in support of that prediction.
Correct: Chief economist predicting a fall in stock prices against the usual rise with increase GDP and this is what first bold face statement says. The second bold face statement gives the reason which chief economist believes will cause stock prices to fall

c) The first is a generalization that the chief economist accepts as true; the second is a
consequence that follows from that generalization.
Incorrect: First is not generalization but a pattern which usually holds.

d) The first is evidence that the chief economist provides in support of a certain prediction; the
second is that prediction.
Incorrect: First is not a prediction but a pattern which usually holds.

e) The first is a pattern of cause and effect that the chief economist predicts will be repeated in
the case at issue; the second acknowledges a circumstance in which that pattern would not
hold.
Incorrect: Chief economist is predicting the pattern to break.
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Re: Chief Economist: Usually, the release of economic data about [#permalink]

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New post 18 Oct 2013, 00:10
The feeling when you get a bold face CR right is soo heavenly.... :D
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Re: Chief Economist: Usually, the release of economic data about [#permalink]

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New post 05 Oct 2015, 06:17
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: Chief Economist: Usually, the release of economic data about   [#permalink] 05 Oct 2015, 06:17
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