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Economist: The economy of the Republic of Nantau has

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Economist: The economy of the Republic of Nantau has [#permalink] New post 05 Oct 2011, 23:35
00:00
A
B
C
D
E

Difficulty:

  75% (hard)

Question Stats:

43% (01:56) correct 57% (01:42) wrong based on 21 sessions
Economist: The economy of the Republic of Nantau has experienced lower than expected growth in the past year, and the value of its currency has dropped against the Yen. As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease as people turn to cheaper domestic equivalents. However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

In the argument given, the two portions in boldface play which of the following roles?
(A) The first supplies a context for the argument; the second is the argument's main conclusion.
(B) The first introduces a development that the argument predicts will have a certain outcome; the second is a state of affairs that the argument denies will be part of that outcome.
(C) The first presents a development that the argument predicts will have a certain outcome; the second acknowledges a consideration that weighs against that prediction.
(D) The first provides evidence to support a prediction that the argument seeks to defend; the second is that prediction.
(E) The first and the second each provide evidence to support the argument's main conclusion.


Please explain your solution.
[Reveal] Spoiler: OA

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MGMAT 6 650 (51,31) on 31/8/11
MGMAT 1 670 (48,33) on 04/9/11
MGMAT 2 670 (47,34) on 07/9/11
MGMAT 3 680 (47,35) on 18/9/11
GMAT Prep1 680 ( 50, 31) on 10/11/11

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CR notes
http://gmatclub.com/forum/massive-collection-of-verbal-questions-sc-rc-and-cr-106195.html#p832142
http://gmatclub.com/forum/1001-ds-questions-file-106193.html#p832133
http://gmatclub.com/forum/gmat-prep-critical-reasoning-collection-106783.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html?hilit=chineseburned

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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 09:06
Are you sure the answer is C? I have a problem with the will have a certain outcome vs will likely

I would choose A here. but would be happy to hear other people's thoughts about it.
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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 09:07
Would like to know the explanation too
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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 09:09
the answer is C, but i didnt quite get it myself.
_________________

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
MGMAT 6 650 (51,31) on 31/8/11
MGMAT 1 670 (48,33) on 04/9/11
MGMAT 2 670 (47,34) on 07/9/11
MGMAT 3 680 (47,35) on 18/9/11
GMAT Prep1 680 ( 50, 31) on 10/11/11

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
CR notes
http://gmatclub.com/forum/massive-collection-of-verbal-questions-sc-rc-and-cr-106195.html#p832142
http://gmatclub.com/forum/1001-ds-questions-file-106193.html#p832133
http://gmatclub.com/forum/gmat-prep-critical-reasoning-collection-106783.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html?hilit=chineseburned

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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 09:10
Mind posting the OE? What is the source?
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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 09:15
Its a GMAT Hacks Question. Here it is
http://www.gmatdaily.com/20111004-gmat- ... e-day.html
_________________

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
MGMAT 6 650 (51,31) on 31/8/11
MGMAT 1 670 (48,33) on 04/9/11
MGMAT 2 670 (47,34) on 07/9/11
MGMAT 3 680 (47,35) on 18/9/11
GMAT Prep1 680 ( 50, 31) on 10/11/11

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
CR notes
http://gmatclub.com/forum/massive-collection-of-verbal-questions-sc-rc-and-cr-106195.html#p832142
http://gmatclub.com/forum/1001-ds-questions-file-106193.html#p832133
http://gmatclub.com/forum/gmat-prep-critical-reasoning-collection-106783.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html?hilit=chineseburned

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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 09:31
I don't like the phrasing of the latter part of choice C but if broken down , I now agree that it is a better choice than B(my selection).
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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 09:51
Still unclear for me how Likely = Certain.
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Re: Economy of Nantau [#permalink] New post 06 Oct 2011, 10:35
Unclear for me too.. Could anyone please explain in detail.
_________________

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
MGMAT 6 650 (51,31) on 31/8/11
MGMAT 1 670 (48,33) on 04/9/11
MGMAT 2 670 (47,34) on 07/9/11
MGMAT 3 680 (47,35) on 18/9/11
GMAT Prep1 680 ( 50, 31) on 10/11/11

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
CR notes
http://gmatclub.com/forum/massive-collection-of-verbal-questions-sc-rc-and-cr-106195.html#p832142
http://gmatclub.com/forum/1001-ds-questions-file-106193.html#p832133
http://gmatclub.com/forum/gmat-prep-critical-reasoning-collection-106783.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html
http://gmatclub.com/forum/how-to-get-6-0-awa-my-guide-64327.html?hilit=chineseburned

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Re: Economy of Nantau [#permalink] New post 08 Oct 2011, 20:11
I'm not convinced about C.

Can someone explain how 'an increase in trade surplus' contradicts 'a decrease in imports' ? If anything, a decrease in import will supplement an increase in trade surplus.

For, trade surplus = Net outward goods movement - Net inward goods movement.

I peg D to be the better option. But that's obviously wrong given that the OA is C!
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Re: Economy of Nantau [#permalink] New post 09 Oct 2011, 20:27
catfreak wrote:
and the value of its currency has dropped against the Yen.

Imports will be costlier and hence will definitely reduce the demand for luxury items.
Quote:
However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

Reduced imports means less usage of foreign currency and hence surplus of foreign currency in comparison with previous estimates.

Currency devaluation also means lower manufacturing cost when seen in terms of foreign currency.
e.g. the current devaluation of Indian Rupees against American Dollar.
This devaluation has resulted in increased cost of imports like cars, perfumes, electronics etc. But on the other hand Indian IT companies are posting stronger Quarter results. It is possible because, the main export these IT companies i.e. IT services is now cheaper in when seen in American Dollars. Labor rate for an hour remains the same (viz. $50) but the same amount now fetches more in local currency. (INR 2500 Approx). So if the IT Engineer is paid INR 500 per hour, when the exchange rate was INR 42 per dollar (earning from IT service=INR 2100 - INR 500), the same export will cost less now (earning from IT service=INR 2500 - INR 500).
Re: Economy of Nantau   [#permalink] 09 Oct 2011, 20:27
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