LamboWalker wrote:
In the country of Xania, periods of political instability are always accompanied by a volatile Xania stock market and by volatility of Xania's currency compared to currencies of other countries. At the present time, Xania's currency is experiencing volatility. Hence, the Xania stock market must also be experiencing volatility.
Which of the following allows the conclusion above to be properly drawn?
(A) Whenever Xania is politically stable, the Xania currency is stable as well.
(B) Whenever the Xania currency is stable, Xania is politically stable as well.
(C) Whenever the Xania stock market is unstable, Xania is politically unstable as well.
(D) Whenever the Xania stock market is unstable, the Xania currency is unstable as well.
(E) Whenever the Xania stock market is stable, the Xania currency is stable as well.
Official Explanation:The correct answer is A. The argument boils down to the following:
Premise 1: If there is political instability, then the stock market is volatile (unstable).
Premise 2: If there is political instability, then the currency is volatile.
Premise 3: The currency is volatile.
Conclusion: The stock market is volatile.
To reveal the argument's structure, let's reduce it to symbols:
Premise 1: If A, then B.
Premise 2: If A, then C.
Premise 3: C.
Conclusion: B.
The conclusion above requires the following additional premise:
Premise 4: If the currency is volatile, then there is political instability.
Premise 4: If C, then A.
Only answer choice (A) provides this essential premise. Note that premise number 4 above is essentially the same proposition as answer choice (A). In other words, the following two prepositions are logically identical:
Premise 4: If C, then A.
Answer choice (A): If not A, then not C.
Choice (B) merely reiterates premise number 2. In other words, the following two statements are essentially the same:
If X, then Y.
If not Y, then not X.
Choice (C) commits the following fallacy:
Premise: If X, then Y.
Conclusion: If Y, then X.
Choice (D) would lead to the conclusion that if the stock market is volatile, then the currency is volatile. In other words, (D) commits the same fallacy as (C):
Premise: If X, then Y.
Conclusion: If Y, then X.
Choice (E) merely reiterates the argument's conclusion. In other words, the following two statements are essentially the same:
If X, then Y.
If not Y, then not X.
(Source: Petersons)