marshpa wrote:
The recent decline in the value of the dollar was triggered by a prediction of slower economic growth in the coming year. But that prediction would not have adversely affected the dollar had it not been for the government’s huge budget deficit, which must therefore be decreased to prevent future currency declines.
Which of the following, if true, would most seriously weaken the conclusion about how to prevent future currency declines?
(A) The government has made little attempt to reduce the budget deficit.
(B) The budget deficit has not caused a slowdown in economic growth.
(C) The value of the dollar declined several times in the year prior to the recent prediction of slower economic growth.
(D) Before there was a large budget deficit, predictions of slower economic growth frequently caused declines in the dollar’s value.
(E) When there is a large budget deficit, other events in addition to predictions of slower economic growth sometimes trigger declines in currency value.
The Official Guide for GMAT Review, 10th Edition, 2003Practice QuestionQuestion No.: CR 61
Page: 514
Dollar decline was triggered by a prediction of slower economic growth in the coming year.
Govt has huge budget deficit that is why the prediction affected dollar.
Conclusion: To avoid future currency declines, decrease budget deficit.
The conclusion is saying that if budget deficit is reduced, future currency declines can be avoided. We need to weaken this.
(A) The government has made little attempt to reduce the budget deficit.
It doesn't matter whether the Govt has tried to reduce deficit or not.
(B) The budget deficit has not caused a slowdown in economic growth.
The argument does not say that the budget deficit (BD) caused slowdown in economic growth (S). We don't know what is causing economic growth (S).
All the argument says is that the presence of BD and the prediction of S triggered dollar decline.
The cause of S is unknown and irrelevant. We are discussing the cause of dollar decline.
(C) The value of the dollar declined several times in the year prior to the recent prediction of slower economic growth.
Since there is budget deficit, it is possible that varies different events are causing dollar decline. So fixing the deficit may avoid dollar decline.
(D) Before there was a large budget deficit, predictions of slower economic growth frequently caused declines in the dollar’s value.
This says that dollar declines happened because of S even before the presence of BD. So even if BD is not there, S could cause dollar declines. This puts a question mark on our theory. Reducing BD may not help us avoid dollar declines then. This is correct.
(E) When there is a large budget deficit, other events in addition to predictions of slower economic growth sometimes trigger declines in currency value.
This helps our conclusion. Lowering budget deficit may help us avoid dollar decline.
Answer (D)
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