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

It is currently 17 Dec 2014, 21:39

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:
Senior Manager
Senior Manager
User avatar
Joined: 10 Dec 2008
Posts: 484
Location: United States
GMAT 1: 760 Q49 V44
GPA: 3.9
Followers: 31

Kudos [?]: 128 [0], given: 12

The downturn in the economy last year has prompted many [#permalink] New post 20 Aug 2009, 07:32
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

49% (02:03) correct 51% (01:24) wrong based on 86 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 anticipation 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?

What business sectors were most affected by the layoffs?
How much of their savings, on average, do laid-off employees deplete before finding new employment?
What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?
What percentage of people laid off have savings accounts?
What has been the average salary during the period since the layoffs?
Current Student
User avatar
Joined: 18 Jun 2009
Posts: 361
Location: San Francisco
Schools: Duke,Oxford,IMD,INSEAD
Followers: 8

Kudos [?]: 63 [0], given: 15

Re: Difficult Evaluate the Argument [#permalink] New post 20 Aug 2009, 08:10
bipolarbear wrote:
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 anticipation 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?

What business sectors were most affected by the layoffs?
How much of their savings, on average, do laid-off employees deplete before finding new employment?
What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs?
What percentage of people laid off have savings accounts?
What has been the average salary during the period since the layoffs?



IMO B
1 KUDOS received
Senior Manager
Senior Manager
User avatar
Joined: 10 Dec 2008
Posts: 484
Location: United States
GMAT 1: 760 Q49 V44
GPA: 3.9
Followers: 31

Kudos [?]: 128 [1] , given: 12

Re: Difficult Evaluate the Argument [#permalink] New post 20 Aug 2009, 09:09
1
This post received
KUDOS
[Reveal] Spoiler:
The conclusion of the argument is that the prediction of decreased consumer spending has not come to pass. The evidence for this is that there has been no corresponding increase in the amount of money set aside in savings accounts by the general public.

This question asks us to choose a question whose answer will provide information relevant to evaluating the significance of the fact that the amount of money placed in savings accounts has not increased. The author mentions this savings pattern to support the claim that people have not been curtailing their discretionary spending. So we need to find a question whose answer will relate to savings and spending patterns.

(A) Information about which business sectors were most affected by the layoffs will not help us establish the relevance of the savings pattern to the claim.

(B) The savings used by those who are laid off has no bearing on the savings patterns of those who are not laid off, which is the group this argument addresses ("even if their jobs were secure").

(C) CORRECT. This question asks about the prices of necessities such as food and utilities. If people have not been saving their money, perhaps they have been spending it on necessities (as opposed to spending it on discretionary items). If these items have become more expensive, then perhaps people have not been able to save money despite curtailing their discretionary spending.

(D) The percentage of people with savings accounts is not related to the question of whether people have curtailed their discretionary spending or increased the amount they save.

(E) Knowing the statistics for average salaries during the period since the layoffs will not help us evaluate the significance of the spending and savings patterns during that time. It might help to be able to compare the statistics for the periods before and after the layoffs, but knowing just one of those statistics tells us nothing about the trends.
Current Student
User avatar
Joined: 18 Jun 2009
Posts: 361
Location: San Francisco
Schools: Duke,Oxford,IMD,INSEAD
Followers: 8

Kudos [?]: 63 [0], given: 15

Re: Difficult Evaluate the Argument [#permalink] New post 20 Aug 2009, 09:29
bipolarbear wrote:
[Reveal] Spoiler:
The conclusion of the argument is that the prediction of decreased consumer spending has not come to pass. The evidence for this is that there has been no corresponding increase in the amount of money set aside in savings accounts by the general public.

This question asks us to choose a question whose answer will provide information relevant to evaluating the significance of the fact that the amount of money placed in savings accounts has not increased. The author mentions this savings pattern to support the claim that people have not been curtailing their discretionary spending. So we need to find a question whose answer will relate to savings and spending patterns.

(A) Information about which business sectors were most affected by the layoffs will not help us establish the relevance of the savings pattern to the claim.

(B) The savings used by those who are laid off has no bearing on the savings patterns of those who are not laid off, which is the group this argument addresses ("even if their jobs were secure").

(C) CORRECT. This question asks about the prices of necessities such as food and utilities. If people have not been saving their money, perhaps they have been spending it on necessities (as opposed to spending it on discretionary items). If these items have become more expensive, then perhaps people have not been able to save money despite curtailing their discretionary spending.

(D) The percentage of people with savings accounts is not related to the question of whether people have curtailed their discretionary spending or increased the amount they save.

(E) Knowing the statistics for average salaries during the period since the layoffs will not help us evaluate the significance of the spending and savings patterns during that time. It might help to be able to compare the statistics for the periods before and after the layoffs, but knowing just one of those statistics tells us nothing about the trends.




I disagree, the question is about savings pattern of the general public and not only the people who have not got laid off. I still go with B
Manager
Manager
avatar
Joined: 15 Jun 2009
Posts: 164
Followers: 1

Kudos [?]: 23 [0], given: 8

Re: Difficult Evaluate the Argument [#permalink] New post 20 Aug 2009, 10:17
IMO C...
Senior Manager
Senior Manager
User avatar
Joined: 26 Jul 2009
Posts: 359
Followers: 2

Kudos [?]: 31 [0], given: 32

Re: Difficult Evaluate the Argument [#permalink] New post 20 Aug 2009, 19:26
Explanation of B is unclear.

Extracted: "Economists predicted that these layoffs would cause people generally to cut back on their discretionary spending even if their jobs were secure, in anticipation of coming hard times."

The stimulus states that people [laid off or with jobs] generally cut back on spending. Hence option B is limited in the sense that it only targets the laid off people.

Hence option C is best since it affects all.
Director
Director
avatar
Joined: 05 Jun 2009
Posts: 852
WE 1: 7years (Financial Services - Consultant, BA)
Followers: 8

Kudos [?]: 197 [0], given: 106

Re: Difficult Evaluate the Argument [#permalink] New post 21 Aug 2009, 09:44
Got Confused but then picked C. Nice question!
_________________

Consider kudos for the good post ... :beer
My debrief : journey-670-to-720-q50-v36-long-85083.html

Intern
Intern
User avatar
Joined: 18 Feb 2010
Posts: 20
Followers: 0

Kudos [?]: 8 [0], given: 2

Re: Difficult Evaluate the Argument [#permalink] New post 08 Apr 2010, 02:38
C
though the layoffs have taken place it is necessary to know whether the prices of necessities have increased or decreased. Suppose the price of necessities has decreased. thus in spite of layoffs, general public would not feel the need to go for extra savings as now the necessities are cheaper.
On the other hand if necessities are dearer than the extra savings may be used up.

Thus this question (C) gives the criteria to evaluate the saving pattern which of course has not come to pass :)
_________________

If you like my post, shower kudos :)

Believe that something extraordinary is possible

SVP
SVP
avatar
Joined: 17 Feb 2010
Posts: 1560
Followers: 12

Kudos [?]: 246 [0], given: 6

Re: Difficult Evaluate the Argument [#permalink] New post 08 Apr 2010, 12:12
Should be (C).

downturn in economy ==> caused lay offs ==> lost of jobs

economist predicted that people will cut back in discretionary spneding in anticipation of hard times

prediction was wrong because people did not have any money inh savings account.

What would be important in finding out why people do not have money in savings a/c?

What business sectors were most affected by the layoffs? - does not help
How much of their savings, on average, do laid-off employees deplete before finding new employment? - we are talking about general public
What has been the percent increase in the cost of necessities such as food, housing, and utilities during the period since the layoffs? - Correct
What percentage of people laid off have savings accounts? - we are talking about general public
What has been the average salary during the period since the layoffs? - average salary alone will not help unless we have something more to compare with average salary
Manager
Manager
avatar
Joined: 27 Dec 2009
Posts: 172
Followers: 2

Kudos [?]: 31 [0], given: 3

Re: Difficult Evaluate the Argument [#permalink] New post 08 Apr 2010, 13:09
Should be C
Manager
Manager
User avatar
Joined: 28 Feb 2010
Posts: 176
WE 1: 3 (Mining Operations)
Followers: 4

Kudos [?]: 21 [0], given: 33

Re: Difficult Evaluate the Argument [#permalink] New post 08 Apr 2010, 21:47
IMO C....nice explanation provided...Gud :)
_________________

Regards,
Invincible...:)
"The way to succeed is to double your error rate."
"Most people who succeed in the face of seemingly impossible conditions are people who simply don't know how to quit."

Manager
Manager
avatar
Joined: 21 Jan 2010
Posts: 233
Followers: 4

Kudos [?]: 57 [0], given: 38

Re: Difficult Evaluate the Argument [#permalink] New post 09 Apr 2010, 10:13
one more vote for C.

B is limited to the laid off population.
Manager
Manager
avatar
Joined: 25 Feb 2009
Posts: 57
Followers: 1

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

Re: Difficult Evaluate the Argument [#permalink] New post 20 Jan 2011, 01:02
First I chose D. But now I totally agree with seekmba. Nice explanation! Well-done!
Retired Moderator
User avatar
Status: 2000 posts! I don't know whether I should feel great or sad about it! LOL
Joined: 04 Oct 2009
Posts: 1726
Location: Peru
Schools: Harvard, Stanford, Wharton, MIT & HKS (Government)
WE 1: Economic research
WE 2: Banking
WE 3: Government: Foreign Trade and SMEs
Followers: 69

Kudos [?]: 377 [0], given: 109

Re: Difficult Evaluate the Argument [#permalink] New post 20 Jan 2011, 13:44
+1 C

The key is reading well, word by word. 8-)
_________________

"Life’s battle doesn’t always go to stronger or faster men; but sooner or later the man who wins is the one who thinks he can."

My Integrated Reasoning Logbook / Diary: my-ir-logbook-diary-133264.html

Senior Manager
Senior Manager
avatar
Status: Do and Die!!
Joined: 15 Sep 2010
Posts: 333
Followers: 1

Kudos [?]: 89 [0], given: 193

Re: Difficult Evaluate the Argument [#permalink] New post 20 Jan 2011, 14:58
boeinz wrote:
Explanation of B is unclear.

Extracted: "Economists predicted that these layoffs would cause people generally to cut back on their discretionary spending even if their jobs were secure, in anticipation of coming hard times."

The stimulus states that people [laid off or with jobs] generally cut back on spending. Hence option B is limited in the sense that it only targets the laid off people.

Hence option C is best since it affects all.


Good reasoning for selecting C, though i went for B
_________________

I'm the Dumbest of All !!

Manager
Manager
avatar
Joined: 27 Oct 2010
Posts: 190
Followers: 1

Kudos [?]: 7 [0], given: 20

Re: Difficult Evaluate the Argument [#permalink] New post 20 Jan 2011, 17:00
C it is
Manager
Manager
avatar
Joined: 27 Jul 2010
Posts: 197
Location: Prague
Schools: University of Economics Prague
Followers: 1

Kudos [?]: 19 [0], given: 15

GMAT ToolKit User
Re: Difficult Evaluate the Argument [#permalink] New post 21 Jan 2011, 06:01
+C

When people have constant income, prices of necessities increase and savings remain the same, there should be decline in the expenditures on discretionary spending.

Also when you know, how prices of necessities evolved, you can evaluate the discretionary spending.
_________________

You want somethin', go get it. Period!

Senior Manager
Senior Manager
User avatar
Joined: 30 Nov 2010
Posts: 264
Schools: UC Berkley, UCLA
Followers: 1

Kudos [?]: 57 [0], given: 66

Re: Difficult Evaluate the Argument [#permalink] New post 21 Jan 2011, 10:26
I picked C :)
_________________

Thank you for your kudoses Everyone!!!


"It always seems impossible until its done."
-Nelson Mandela

SVP
SVP
avatar
Joined: 16 Nov 2010
Posts: 1690
Location: United States (IN)
Concentration: Strategy, Technology
Followers: 31

Kudos [?]: 317 [0], given: 36

Premium Member Reviews Badge
Re: Difficult Evaluate the Argument [#permalink] New post 30 Mar 2011, 20:31
The answer is C.
_________________

Formula of Life -> Achievement/Potential = k * Happiness (where k is a constant)

Director
Director
avatar
Status: Matriculating
Affiliations: Chicago Booth Class of 2015
Joined: 03 Feb 2011
Posts: 928
Followers: 12

Kudos [?]: 206 [0], given: 123

Reviews Badge
Re: Difficult Evaluate the Argument [#permalink] New post 02 Apr 2011, 23:22
I think C is vulnerable since the economy is not doing good. Hence the cost of the necessities are likely to go up. So the decision on just the percentage increase in the costs to evaluate the spending pattern of people is half baked. A more thorough analysis is the spending patterns on the items itself. Since the argument leaves the logical gap to connect the cost of the items with the spending pattern for those items, it is unconvincing. If this is a gmat question I will send the question for reevaluation by the designers. I may sound stilted but a true gmat question has a overwhelming unambiguous answer.
Re: Difficult Evaluate the Argument   [#permalink] 02 Apr 2011, 23:22
    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
The downturn in the economy last year has prompted many karlfurt 17 15 Oct 2006, 11:08
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  

Go to page    1   2    Next  [ 31 posts ] 



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®.