Quote:
Household indebtedness, which some theorists regard as causing recession, was high preceding the recent recession, but so was the value of assets owned by households. Admittedly, if most of the assets were owned by quite affluent households, and most of the debt was owed by low-income households, high household debt levels could have been the cause of the recession despite high asset values: low-income households might have decreased spending in order to pay off debts while the quite affluent ones might simply have failed to increase spending. But, in fact, quite affluent people must have owed most of the household debt, since money is not lent to those without assets. Therefore, the real cause must lie elsewhere.
Which one of the following, if true, casts the most doubt on the argument?
(A) Prior to the recent recession, middle-income households owed enough debt that they had begun to decrease spending.
(B) The total value of the economy's household debt is exceeded by the total value of assets held by households.
(C) Low-income households somewhat decreased their spending during the recent recession.
(D) During a recession the affluent usually borrow money only in order to purchase assets.
(E) Household debt is the category of debt least likely to affect the economy.
Tough question, but yeah he's right. Using a diagram thought strategy from
GMATPill Study Method, I finally deciphered what this argument is saying.
Step 1: High Household Debt => Recession
Step 2: The above statement could be true if Affluent =>owned Assets; and Low-income =>owned Debt
Step 3: Connect. Low-income => owned Debt => caused Recession
Step 4: Now, with the phrase starting with "But..."
It's offering a counter to the original argument. It is saying
Affluent =>Borrow with assets => Own Debt
rather than
Low-income => Own Debt
Step 5: The bottom line argument is that "Something else" => recession; Not "Low income"=>High household debt => recession
Step 6: To weaken his argument that something else caused the recession, a good way is to say that the other argument is true. That Low-income ppl were the real owners of high household debt which caused the recession.
Step 7: Answer A says middle-income owners owed enough debt to begin to decrease spending. Middle income is not exactly low income but is definitely not high/affluent income people. THis goes along with the "weakening" information we were looking for as outlined in step 6
Got this thinking pattern from
GMAT Pill, but I think it's a lot easier to see visually. So can't really show it here.
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21% (01:43) correct
