Find all School-related info fast with the new School-Specific MBA Forum

It is currently 23 Oct 2014, 11:46

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

The downturn in the economy last year has prompted many

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Director
Director
avatar
Joined: 02 Mar 2006
Posts: 582
Location: France
Followers: 1

Kudos [?]: 19 [0], given: 0

The downturn in the economy last year has prompted many [#permalink] New post 15 Oct 2006, 11:08
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

100% (01:48) correct 0% (00:00) wrong based on 1 sessions
The downturn in the economy last year has prompted many companies to make widely publicized layoffs, resulting in thousands of lost jobs. Economists predicted that these layoffs would cause people generally to cut back on their discretionary spending even if their jobs were secure, in fear of coming hard times. However, this prediction has not come to pass, since there has been no increase in the amount of money set aside by the general public in savings accounts.

The answer to which of the following questions would be most useful in evaluating the significance of the savings patterns described above?

A.What business sectors were most affected by the layoffs?
B.What were the savings patterns of the general public before the layoffs?
C.What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?
D.What percentage of people laid off have savings accounts?
E.What has been the average salary during the period since the layoffs?
Senior Manager
Senior Manager
User avatar
Joined: 30 Aug 2006
Posts: 374
Followers: 2

Kudos [?]: 10 [0], given: 0

 [#permalink] New post 15 Oct 2006, 11:22
C) if discretionary spending is being cut by increases in essential costs, then this would explain why there has been no increase in savings

A) irrelevant
B) we know they have stayed roughly similar, so also irrelevant
C)
D) who cares
E) could be useful, if average salaries are dropping then this would explain reduction in discretionary spending, however this may be hard to quantify due to the reduction in average salary caused by layoffs. C gives a more concrete reason why savings pattern has not changed than this.
SVP
SVP
User avatar
Joined: 05 Jul 2006
Posts: 1541
Followers: 5

Kudos [?]: 83 [0], given: 39

 [#permalink] New post 15 Oct 2006, 12:49
I think B
Director
Director
avatar
Joined: 17 Jul 2006
Posts: 716
Followers: 1

Kudos [?]: 8 [0], given: 0

 [#permalink] New post 15 Oct 2006, 14:55
C talks about the cost of necessities . We will not get answers from it.

B seems to be the better one .
Intern
Intern
avatar
Joined: 14 Oct 2006
Posts: 4
Location: Virginia
Followers: 0

Kudos [?]: 0 [0], given: 0

 [#permalink] New post 15 Oct 2006, 15:11
since the passage states that there has been "no increase in money saved" and the passage askes us what question will help us evaluate that statement, than if we knew what the savings patterns were before layoffs than it would be helpful to evaluate the final statement.

B for me!
Director
Director
avatar
Joined: 18 Jul 2006
Posts: 532
Followers: 1

Kudos [?]: 25 [0], given: 0

 [#permalink] New post 15 Oct 2006, 15:36
Chose B.
VP
VP
User avatar
Joined: 25 Jun 2006
Posts: 1176
Followers: 2

Kudos [?]: 44 [0], given: 0

 [#permalink] New post 15 Oct 2006, 18:16
B 2
VP
VP
User avatar
Joined: 21 Aug 2006
Posts: 1026
Followers: 1

Kudos [?]: 19 [0], given: 0

 [#permalink] New post 15 Oct 2006, 18:33
londonluddite wrote:
C) if discretionary spending is being cut by increases in essential costs, then this would explain why there has been no increase in savings

A) irrelevant
B) we know they have stayed roughly similar, so also irrelevant
C)
D) who cares
E) could be useful, if average salaries are dropping then this would explain reduction in discretionary spending, however this may be hard to quantify due to the reduction in average salary caused by layoffs. C gives a more concrete reason why savings pattern has not changed than this.


I can't imagine inflation (increase in costs of basic necessities) when there are wide spread lay offs. If we get back to basics of economics, inflation usually results when too much money is chasing too few goods. That wont be the case when there are wide spread layoffs. So C is ruled out for me.

B can't be the answer. What is the need for understanding saving patterns, when the argument is saying that "there has been no increase in the amount of money set aside by the general public in savings accounts" what else do they mean by saving patterns?

E seem to be the answer. The highlighted text above gives reason, but says it can't be quantified. There are more than one ways to quantify average salary. Many market research organizations quantify average salaries. Often governments also calculate that. US government, I am sure does that.
_________________

The path is long, but self-surrender makes it short;
the way is difficult, but perfect trust makes it easy.


Last edited by ak_idc on 16 Oct 2006, 06:48, edited 2 times in total.
Intern
Intern
avatar
Joined: 14 Oct 2006
Posts: 34
Location: Boston
Followers: 0

Kudos [?]: 5 [0], given: 0

 [#permalink] New post 15 Oct 2006, 18:42
what's OA ?
_________________

1st 600, 2nd 680, 3rd 760 ? =)

Director
Director
avatar
Joined: 23 Jun 2005
Posts: 847
GMAT 1: 740 Q48 V42
Followers: 5

Kudos [?]: 25 [0], given: 1

Re: CR20 mgmat bank [#permalink] New post 15 Oct 2006, 20:37
B and C are both close, but I will go with C.

B.What were the savings patterns of the general public before the layoffs?
Did people primarily use savings accounts to save money or did they use other modes - maybe bonds?

C.What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?
If the cost of necessities has risen steeply since the layoffs, then the general public may not have money to save.
Senior Manager
Senior Manager
User avatar
Joined: 13 Jul 2006
Posts: 327
Followers: 1

Kudos [?]: 2 [0], given: 0

Re: CR20 mgmat bank [#permalink] New post 15 Oct 2006, 21:52
anandsebastin wrote:
B and C are both close, but I will go with C.

B.What were the savings patterns of the general public before the layoffs?
Did people primarily use savings accounts to save money or did they use other modes - maybe bonds?

C.What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?
If the cost of necessities has risen steeply since the layoffs, then the general public may not have money to save.


I disagree anand.The argument goes from savings(in whatevr instruments they be ) to savings in savings accounts.
Until and unless we know that people save in savings accounts the argument cannot be evaluated.
_________________

A well-balanced person is one who has a drink in each of his hands.

VP
VP
avatar
Joined: 21 Mar 2006
Posts: 1136
Location: Bangalore
Followers: 2

Kudos [?]: 22 [0], given: 0

 [#permalink] New post 15 Oct 2006, 22:03
One more for C. B is very close though. what got me were...

Economists predicted that these layoffs would cause people generally to cut back on their discretionary spending even if their jobs....
AND
What has been the percent increase in the cost of necessities such as food, housing...
Senior Manager
Senior Manager
User avatar
Joined: 11 Jul 2006
Posts: 385
Location: TX
Followers: 1

Kudos [?]: 6 [0], given: 0

 [#permalink] New post 16 Oct 2006, 07:08
One more for C

It might explain why people still have less in savings and imply that even though people cut back on discretionary spending they are unable to save less due to increase in costs of basic neccesities.
Manager
Manager
User avatar
Joined: 31 Aug 2006
Posts: 213
Followers: 1

Kudos [?]: 2 [0], given: 0

 [#permalink] New post 30 Oct 2006, 13:20
(C)
karlfurt - OA please.
Manager
Manager
avatar
Joined: 29 Jul 2006
Posts: 92
Followers: 1

Kudos [?]: 0 [0], given: 0

 [#permalink] New post 30 Oct 2006, 19:19
OA should be C
Director
Director
avatar
Joined: 24 Aug 2006
Posts: 754
Location: Dallas, Texas
Followers: 5

Kudos [?]: 30 [0], given: 0

 [#permalink] New post 30 Oct 2006, 20:48
people are cutting back discretionary spending such as eating out in good restaurants, vacations etc but still there is no saving. Why ? because the inflation is eating the extra saving ...

(C) works for me ....
_________________

"Education is what remains when one has forgotten everything he learned in school."

Director
Director
avatar
Joined: 02 Mar 2006
Posts: 582
Location: France
Followers: 1

Kudos [?]: 19 [0], given: 0

 [#permalink] New post 31 Oct 2006, 01:09
Sorry, I forgot to give the OA, which is C.
VP
VP
User avatar
Joined: 25 Jun 2006
Posts: 1176
Followers: 2

Kudos [?]: 44 [0], given: 0

 [#permalink] New post 31 Oct 2006, 04:55
hmm. C is better.

B's "before layoff" is not good. it has not much to do with the savings pattern after the layoff.
  [#permalink] 31 Oct 2006, 04:55
    Similar topics Author Replies Last post
Similar
Topics:
The downturn in the economy last year has prompted jogeshanand 0 14 Sep 2014, 02:58
3 Experts publish their posts in the topic The economic recession of the last year has prompted many Vercules 9 14 Mar 2013, 20:22
1 The downturn in the economy last year has prompted many bipolarbear 30 20 Aug 2009, 07:32
The downturn in the economy last year has prompted many jjhko 4 23 Aug 2006, 20:29
For the last five years the Dutch economy has grown faster cybera 4 13 Jul 2005, 18:22
Display posts from previous: Sort by

The downturn in the economy last year has prompted many

  Question banks Downloads My Bookmarks Reviews Important topics  


cron

GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.