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Economist: Some policymakers believe that our country s [#permalink]
16 Mar 2007, 10:35
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Economist: Some policymakers believe that our countryâ€™s continued economic growth requires a higher level of personal savings than we currently have. A recent legislative proposal would allow individuals to set up savings accounts in which interest earned would be exempt from taxes until money is withdrawn from the account. Backers of this proposal claim that its implementation would increase the amount of money available for banks to loan at a relatively small cost to the government in lost tax revenues. Yet, when similar tax-incentive programs were tried in the past, virtually all of the money invested through them was diverted from other personal savings, and the overall level of personal savings was unchanged.
The author criticizes the proposed tax-incentive program by
(A) challenging a premise on which the proposal is based
(B) pointing out a disagreement among policymakers
(C) demonstrating that the proposalâ€™s implementation is not feasible
(D) questioning the judgment of the proposalâ€™s backers by citing past cases in which they had advocated programs that have proved ineffective
(E) disputing the assumption that a program to encourage personal savings is needed
D says that the author is specifically criticizing the backers of the proposal by pointing out other programs where their judgement has been wrong.
In the passage, the author points out that programs similar to the one proposed have been wrong - he says nothing about other programs the backers have supported in the past being wrong.
It's the difference between saying: "The backers support X. But X has been wrong in the past, so X is wrong now" and "The backers support X. But the backers have been wrong about Y and Z in the past, so they must be wrong about X."
I think the answer is A. The author is challenging the idea that offering the plan will increase the amount of savings. What is the OA?
The backers of Legislative proposal base their support to the proposal based on a premise that implementation of the proposal would increase the amount of money available for banks to loan at a relatively small cost to the government in lost tax revenues.
The economist cites a specific example where such effect has not been observed. Thus, he questions the premise on which the proposal is based.
The economist does not directly question the judgment of the proposalâ€™s backers. Hence D cannot be the answer.
The purpose of the proposal is to increase the amount of personal savings (i.e. banks have more money to lend) but the author at the end refutes that a similar proposal (with seemingly similar purpose) failed because "the overall level of personal savings was unchanged."
Although it did not explicity say that the similar proposal in the past was a "failure", we can infer that it did not achieve its goal from the use of the word "yet" to introduce it.
Check out this awesome article about Anderson on Poets Quants, http://poetsandquants.com/2015/01/02/uclas-anderson-school-morphs-into-a-friendly-tech-hub/ . Anderson is a great place! Sorry for the lack of updates recently. I...