Prior to 1971, the United States was on various forms of a gold standa

Hi,

The wait is over! Here are the official answer and the official explanation.

The official Answer is Option D, which, by the way, was marked correctly by 63% people in 72 votes. Kudos!

I see some great discussion has taken place on this forum. Thanks to all the members who participated, explained and fought for their answers, while maintaining the spirit of the forum. It was great to see such intense activity in a short span of time.

Ok. Now, let’s come to the official explanation. First of all, I have observed that even those who have marked the correct option on this thread are not entirely accurate in their support for Option D. So, I would suggest them also to go through the official explanation. Given that I have the privilege of posting the official explanation after going through the discussions on this thread, I would try to address some of the doubts through this post.

So, here we start:

Argument Analysis

Conclusion:

The author recommends that voters vote for a party that backs the return of the gold standard in the country.

Premises (Reasons for support):

The reasons cited by the author for his recommendation are:
1. A gold standard restricts the ability of government to print money at will
2. A gold standard restricts the ability of government to spend more than it earns in tax revenue
3. The economy has historically performed best under a gold standard

Please note that these three premises are independent and one does not necessarily leads to other. I have seen some posts using one of these premises to support the other premises. This is not the intention of the author as is clear from the grammatical structure used to present these premises. The first two premises are separated by ‘and’ and the third premise is introduced using ‘besides’. Therefore, these three are INDEPENDENT and SEPARATE premises.

Background Information:

1. Prior to 1971, the United States was on various forms of a gold standard through which the value of the dollar was backed by gold reserves and paper money could be redeemed for gold on demand
2. Since 1971, the United States dollar has been a fiat currency backed by "full faith and credit” of the government and not backed by, valued in, or convertible into gold.

Question Stem analysis and Prethinking

“Which of the following data sets can be best used by the author of the above argument to further his conclusion?”

So, we are looking for a data set which the author could use to substantiate his position. In this case, the author can support his position by supporting ANY or ALL of his premises. To do that, we need data to compare the performance of the economy before and after 1971; i.e. before and after the gold standard was done away with. The key is the comparison – just getting data from one era (pre or post 1971 does not help)

While in other strengthen questions, the correct option statement could introduce a new reason to support the conclusion, this cannot be the case with this question. Why? Because all the option statements are data sets and until and unless the passage makes clear the relevance of the data set, we cannot comment on the usability of the data set.

Any data set that the author can use to support any of his premises (cited reasons for support) would be a correct answer choice.

With these thoughts in mind, let’s go over to the option statements.

Analysis of Answer Choices

A. Major economic indicators of United States since 1980 – While economic indicators could be relevant to support his third premise, this choice does not give us the ability to compare the performance before and after 1971. Without this comparison, we cannot strengthen the belief in the third premise. Therefore this choice is INCORRECT.

B. Expenditure on education and healthcare from 1960 to 2000 – As we can see, this data does not correspond to any of the premises. While some of us may think that this data corresponds to the third premise which talks about performance of economy, the data set is too specific to two sectors – expenditure on any one or two sectors is determined not only by the economic performance but also a number of other factors such as priorities of the government. Thus, this is INCORRECT.

C. Money printed by the government as proportion of the Gross Domestic Product from 1950 to 1970 – I have seen some great discussion on the thread for and against this option statement. First of all, the data is relevant, unlike Option B. The data corresponds to the first premise of the author. However, the data set has a similar deficiency as in case of option A – it only talks about one period – in this case, it only talks about period of gold standard currency. The premise says that
“A gold standard restricts the ability of government to print money at will”
Now, to back this up, the author has to present data which shows an increase in money printed as proportion of Gross Domestic Product, after the fiat currency was introduced in 1971. Just knowing this data for period before 1971 won’t help the cause of the author. Therefore, this option is also INCORRECT.

D. Growth in the difference between the revenue and expenditure figures for the government for the last 100 years beginning from 1901. – The data set is relevant as it corresponds to the second premise of the author. Also, the time period captures both the period before and after 1971. This data can be used by the author to support his premise 2 that the difference between revenue and expenditure of government became more pronounced after gold standard was discontinued in 1971. Therefore, this option is CORRECT.

E. Economic growth in the country in 1971 and in 1972. – Even though the data set is relevant as it corresponds to premise 3 but the time period is too small to make any material support for premise 3. Therefore, this option is INCORRECT.

Hope this helps

Thanks,
Chiranjeev