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If interest rates remain at their current high levels, many

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If interest rates remain at their current high levels, many [#permalink] New post 07 May 2013, 14:37
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Question Stats:

52% (02:16) correct 48% (01:22) wrong based on 208 sessions
If interest rates remain at their current high levels, many people who currently rent their residences
will hesitate to purchase homes.
As the price of real estate continues to climb, the costs of a mortgage will be
too burdensome. Sellers will be forced to lower their asking prices. So, high interest rates will eventually
cause the real estate market to stabilize.


In the argument above, the portions in boldface play which of the following roles?

• The first is the author’s main point; the second is a prediction that follows from that point.
• The first is a consideration that the author believes will result in a certain situation; the second is that situation.
• The first is a consideration that weighs against the author’s main point; the second is the author’s main point.
• The first is a prediction; the second is evidence in support of that prediction.
• The first is the author’s main point; the second is evidence used to argue against that point.
[Reveal] Spoiler: OA

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Re: If interest rates remain at their current high levels, many [#permalink] New post 07 May 2013, 23:34
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Very very tricky question, indeed. IMO, B is correct.

Here is my 2 cents.

Interest rates remain high ==> prices of homes increase ==> People stop purchasing homes ==> In turn, people will stop selling homes, because there's no demand
==> The real estate market is frozen because there's no buyers and no sellers. ==> Equilibrium point / Stabilization

Hence, B is correct.
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Re: If interest rates remain at their current high levels, many [#permalink] New post 21 Aug 2013, 17:59
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happyinlove505 wrote:
I was thinking between A and C, and I can't understand why B is correct.

B says:
The first is a consideration that the author believes will result in a certain situation; the second is that situation.

If paraphrased, it means to me that second (stable market) is a situation and then the first one (people hesitating to buy homes) follows that situation. However, it is exactly the opposite in the question stem: people hesitating to buy homes eventually leads to stable market.

Please correct me if I am wrong.


Hi happyinlove505

I'm glad to help.

This question requires you to have some backgrounds of economics.

Your first understanding: "people hesitating to buy homes eventually leads to stable market ==> B is illogical" is not correct. Why?
First of all, stable market happens when demand and supply meet. If customers hesitate to buy homes, the demand declines. If the supply does not decline or declines faster than demand, we have a situation, namely "over supply", leading to UNSTABLE market, not stable market.

Why B is correct?

B seems to be illogical but it's correct. Let see.
The logic of B is:high interest rates --> sub-effect: stable market --> main-effect: people hesitate to buy homes.
The idea that B wants to conveys is: A belief (People hesitate to buy home) will happens in a situation (stable market when interest rate is high).
"High interest rate" is KEY and the main CONDITION leading to the effect "people hesitate to buy homes". The fact "stable market" is just the situation that reflects "high interest rates". If the market is stabilized NOT because of "high interest rate", the logic "people hesitate to buy homes in a stable market" is wrong.

That's why B means "people hesitate to buy homes in a situation - stable market" is correct.

Hope it helps.
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Re: If interest rates remain at their current high levels, many [#permalink] New post 21 Aug 2013, 19:37
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If interest rates remain at their current high levels, many people who currently rent their residences
will hesitate to purchase homes.
As the price of real estate continues to climb, the costs of a mortgage will be
too burdensome. Sellers will be forced to lower their asking prices. So, high interest rates will eventually
cause the real estate market to stabilize.



high interest --> people hesitate buy home
real estate high + high interest, --> mortgage cost high --> lower real estate
conclusion: real estate market stabilizes


In the argument above, the portions in boldface play which of the following roles?

• The first is the author’s main point; the second is a prediction that follows from that point.
The first is NOT the author’s main point;

• The first is a consideration that the author believes will result in a certain situation; the second is that situation.
correct

• The first is a consideration that weighs against the author’s main point; the second is the author’s main point.
The first is a consideration that NOT weighs against the author’s main point

• The first is a prediction; the second is evidence in support of that prediction.
The first is NOT a prediction

• The first is the author’s main point; the second is evidence used to argue against that point.
the second is NOT evidence used to argue against that point
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Re: If interest rates remain at their current high levels, many [#permalink] New post 07 May 2013, 16:10
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Re: If interest rates remain at their current high levels, many [#permalink] New post 08 May 2013, 02:36
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Quote:
The question asks us to analyze the structure of the argument. Specifically, we
are asked to determine the respective roles of the two portions in boldface. To do
so, we need first to find the conclusion of the argument and then determine the
relationship of each boldface portion to that conclusion.
The author argues that high interest rates will cause people to refrain from buying
homes because their mortgage costs will be too high. In turn, sellers will be
forced to lower their asking prices. In the end, this chain of events will work to
stabilize the real estate market. So the last sentence, which happens to be the
second boldface portion, is the conclusion. The first boldface portion is a fact that
the author belives will lead to the stabilization of the market. We need to find a
choice that reflect this assessment.
(A) The first portion is not the author's main point (another term for conclusion).
(B) CORRECT. The first portion is indeed a consideration that the author
believes will result in a particular situation, namely the stabilization of the market.
The second is indeed that situation.
(C) The first portion does not weigh against (contradict) the author's main point
(conclusion).
(D) The first is indeed a prediction, but the second portion is not evidence -- it is
the conclusion.
(E) The first portion is not the main point (conclusion).

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Re: If interest rates remain at their current high levels, many [#permalink] New post 08 May 2013, 05:15
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doubt if this is a 700+ question ..... between 600-700 may be
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Re: If interest rates remain at their current high levels, many [#permalink] New post 21 Aug 2013, 06:04
I was thinking between A and C, and I can't understand why B is correct.

B says:
The first is a consideration that the author believes will result in a certain situation; the second is that situation.

If paraphrased, it means to me that second (stable market) is a situation and then the first one (people hesitating to buy homes) follows that situation. However, it is exactly the opposite in the question stem: people hesitating to buy homes eventually leads to stable market.

Please correct me if I am wrong.
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Re: If interest rates remain at their current high levels, many [#permalink] New post 21 Aug 2013, 10:18
happyinlove505 wrote:
I was thinking between A and C, and I can't understand why B is correct.

B says:
The first is a consideration that the author believes will result in a certain situation; the second is that situation.

If paraphrased, it means to me that second (stable market) is a situation and then the first one (people hesitating to buy homes) follows that situation. However, it is exactly the opposite in the question stem: people hesitating to buy homes eventually leads to stable market.

Please correct me if I am wrong.


IMO B,

I think you misunderstood it; The first is a condition that leads to the second and not the other way around. High interest rates lead to stabilization, but you cannot say stabilization leads to high interest rates.
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Re: If interest rates remain at their current high levels, many [#permalink] New post 21 Aug 2013, 21:31
pqhai wrote:
Hi happyinlove505

I'm glad to help.

This question requires you to have some backgrounds of economics.
...
That's why B means "people hesitate to buy homes in a situation - stable market" is correct.

Hope it helps.

Hello pqhai,

I reviewed your explanation several times, but still could not understand :)
However, not I think I see where my understanding was wrong.

When I first read B, I misinterpreted "The first is a consideration that ... will result in a certain situation" as certain situation will lead to consideration or first. In other words consideration will happen in a situation:)
However, now I see that situation is actually a result of consideration :)
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Re: If interest rates remain at their current high levels, many [#permalink] New post 27 Aug 2014, 01:27
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Re: If interest rates remain at their current high levels, many   [#permalink] 27 Aug 2014, 01:27
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