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# To improve the long-term savings rate of the citizens of

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To improve the long-term savings rate of the citizens of [#permalink]

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08 Oct 2010, 14:59
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Question Stats:

75% (01:56) correct 25% (00:58) wrong based on 458 sessions

To improve the long-term savings rate of the citizens of Levaska, the country's legislature decided to implement a plan that allows investors to save up to $1,000 per year in special accounts without paying taxes on the interest earned unless withdrawals are made before the investor reaches age sixty-five. Withdrawals from these accounts prior to age sixty-five would result in the investor's having to pay taxes on all the accumulated interest at the time of withdrawal. Which of the following, if true, most strongly supports the prediction that the legislature's plan will have its intended effect? A. The money saved in the tax-free savings accounts will be deposited primarily in those banks and financial institutions that supported the legislation instituting the plan. B. The majority of people choosing to take advantage of the tax-free savings accounts will withdraw their money prior to age sixty-five. C. A significant number of the citizens of Levaska will invest in the tax-free savings accounts well before they reach the age of sixty-five. D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts. E. People who are not citizens of Levaska are not eligible to invest in the tax-free savings accounts, even if their income is taxable in Levaska. [Reveal] Spoiler: OA If you have any questions you can ask an expert New! Senior Manager Status: Time to step up the tempo Joined: 24 Jun 2010 Posts: 408 Location: Milky way Schools: ISB, Tepper - CMU, Chicago Booth, LSB Followers: 8 Kudos [?]: 196 [1] , given: 50 Re: Different Levaska Question [#permalink] ### Show Tags 08 Oct 2010, 15:27 1 This post received KUDOS ezinis wrote: To improve the long-term savings rate of the citizens of Levaska, the country's legislature decided to implement a plan that allows investors to save up to$1,000 per year in special accounts without paying taxes on the interest earned unless withdrawals are made before the investor reaches age sixty-five. Withdrawals from these accounts prior to age sixty-five would result in the investor's having to pay taxes on all the accumulated interest at the time of withdrawal.

Which of the following, if true, most strongly supports the prediction that the legislature's plan will have its intended effect?

A. The money saved in the tax-free savings accounts will be deposited primarily in those banks and financial institutions that supported the legislation instituting the plan.
B. The majority of people choosing to take advantage of the tax-free savings accounts will withdraw their money prior to age sixty-five.
C. A significant number of the citizens of Levaska will invest in the tax-free savings accounts well before they reach the age of sixty-five.
D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.
E. People who are not citizens of Levaska are not eligible to invest in the tax-free savings accounts, even if their income is taxable in Levaska.

Straight forward. Option C is correct.

Reasons: POE method.

A - New information provided. Out of scope.
B - This would weaken the prediction.
D - Out of scope.
E - Out of scope or not relevant.
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08 Oct 2010, 20:28
A pretty Obvious ans:
[Reveal] Spoiler:
C

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09 Oct 2010, 02:27
It was obvious but i wasted my 2 min.
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31 Jul 2011, 03:19
can somebody explain me why option D is out of scope?
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27 Aug 2011, 03:46
UtterNonsense wrote:
can somebody explain me why option D is out of scope?

D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.

Hello,

Option D is kind of forcing us to make an additional assumption that since people used to deposit lesser money in previous years, they will suddenly start depositing more after the new policy by the govt. But be careful we don't have enough info to make this assumption.

I would not call it out of scope. Just a good trap answer.
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27 Aug 2011, 10:18
Little confused here..

But with C, how can we guarantee that people will not withdraw any money from the bank and in turn making the plan effective..That is not stated in the answer..The plan would become effective if people invest before 65 and not withdraw until 65..

That was my method of eliminating C..
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28 Aug 2011, 09:03
nothing else fits here except C....so for me its C
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02 Sep 2011, 13:08
OptimusPrimea1 wrote:
Little confused here..
i was also trapped btw C, E but i think C has more logically explanation. First govt objective is to increase long term savings rates and that is only possible when will invest in this plan and also by not withdrawing money before expiry. so if some one wants to invest and make money will invest before he turns 65 and save tax of atleast $1000 a year and C also says that significant number of ppl will invest. i hope this helps u out. But with C, how can we guarantee that people will not withdraw any money from the bank and in turn making the plan effective..That is not stated in the answer..The plan would become effective if people invest before 65 and not withdraw until 65.. That was my method of eliminating C.. Intern Joined: 19 Jun 2011 Posts: 2 Followers: 0 Kudos [?]: 0 [0], given: 0 Re: Different Levaska Question [#permalink] ### Show Tags 02 Sep 2011, 13:19 By the process of elimination got C! Intern Joined: 31 May 2010 Posts: 38 Schools: ESADE, IE Followers: 0 Kudos [?]: 2 [0], given: 2 Re: Different Levaska Question [#permalink] ### Show Tags 02 Sep 2011, 17:41 C seems to be the best among all/ Manager Joined: 10 Jan 2011 Posts: 244 Location: India GMAT Date: 07-16-2012 GPA: 3.4 WE: Consulting (Consulting) Followers: 0 Kudos [?]: 57 [0], given: 25 Re: Different Levaska Question [#permalink] ### Show Tags 16 Sep 2011, 01:14 C is the only possible answer....is this 700 question I have my own doubts _________________ -------Analyze why option A in SC wrong------- Senior Manager Status: MBAing!!!! Joined: 24 Jun 2011 Posts: 311 Location: United States (FL) Concentration: Finance, Real Estate GPA: 3.65 WE: Project Management (Real Estate) Followers: 6 Kudos [?]: 52 [0], given: 56 Re: Different Levaska Question [#permalink] ### Show Tags 16 Sep 2011, 14:47 I picked C...I felt tempted by D. Manager Status: Retaking next month Affiliations: None Joined: 05 Mar 2011 Posts: 229 Location: India Concentration: Marketing, Entrepreneurship GMAT 1: 570 Q42 V27 GPA: 3.01 WE: Sales (Manufacturing) Followers: 5 Kudos [?]: 113 [0], given: 42 Re: Different Levaska Question [#permalink] ### Show Tags 16 Sep 2011, 19:11 Got C basically by POE. Manager Status: Retaking next month Affiliations: None Joined: 05 Mar 2011 Posts: 229 Location: India Concentration: Marketing, Entrepreneurship GMAT 1: 570 Q42 V27 GPA: 3.01 WE: Sales (Manufacturing) Followers: 5 Kudos [?]: 113 [0], given: 42 Re: Different Levaska Question [#permalink] ### Show Tags 16 Sep 2011, 19:12 GMATPASSION wrote: Got C basically by POE. Took me 2:37. Manager Joined: 01 Jun 2011 Posts: 176 Followers: 1 Kudos [?]: 16 [0], given: 6 Re: Different Levaska Question [#permalink] ### Show Tags 18 Sep 2011, 01:15 I pick D VP Joined: 08 Jun 2010 Posts: 1398 Followers: 3 Kudos [?]: 113 [0], given: 812 Re: Different Levaska Question [#permalink] ### Show Tags 20 Sep 2011, 18:29 bblast wrote: UtterNonsense wrote: can somebody explain me why option D is out of scope? D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts. Hello, Option D is kind of forcing us to make an additional assumption that since people used to deposit lesser money in previous years, they will suddenly start depositing more after the new policy by the govt. But be careful we don't have enough info to make this assumption. I would not call it out of scope. Just a good trap answer. what make this question hard? first, it is long answer choices and we spend more time to read long answer choices. the trap answer D is explained wonderfully by you. what I wish to know is WEATHER TRAP ANSWER INDUCE US TO MAKE AN ASSUMPTION AND TO BE WRONG. if we know this kind of thinking of gmat, we can realize the trap in the test condition more easily. Manager Status: Target MBA Joined: 20 Jul 2010 Posts: 211 Location: Singapore Followers: 0 Kudos [?]: 16 [0], given: 12 Re: Different Levaska Question [#permalink] ### Show Tags 27 Sep 2011, 08:15 ezinis wrote: To improve the long-term savings rate of the citizens of Levaska, the country's legislature decided to implement a plan that allows investors to save up to$1,000 per year in special accounts without paying taxes on the interest earned unless withdrawals are made before the investor reaches age sixty-five. Withdrawals from these accounts prior to age sixty-five would result in the investor's having to pay taxes on all the accumulated interest at the time of withdrawal.

Which of the following, if true, most strongly supports the prediction that the legislature's plan will have its intended effect?

A. The money saved in the tax-free savings accounts will be deposited primarily in those banks and financial institutions that supported the legislation instituting the plan.
B. The majority of people choosing to take advantage of the tax-free savings accounts will withdraw their money prior to age sixty-five.
C. A significant number of the citizens of Levaska will invest in the tax-free savings accounts well before they reach the age of sixty-five.
D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.
E. People who are not citizens of Levaska are not eligible to invest in the tax-free savings accounts, even if their income is taxable in Levaska.

I got C by POE
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27 Sep 2011, 13:22
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09 Oct 2011, 01:14
was initially confused b/w C and D...
but after careful examination, i chose C...
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