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

It is currently 16 Sep 2014, 23:45

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

Which of the following, if true, is the most logical

  Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:
Manager
Manager
avatar
Joined: 04 Jan 2011
Posts: 73
Followers: 1

Kudos [?]: 7 [0], given: 4

Which of the following, if true, is the most logical [#permalink] New post 05 Apr 2011, 21:41
00:00
A
B
C
D
E

Difficulty:

  45% (medium)

Question Stats:

64% (02:59) correct 36% (00:59) wrong based on 11 sessions
Which of the following, if true, is the most logical completion of the argument below?
The tax system of the Republic of Grootland encourages borrowing by granting its taxpayers tax relief for interest paid on loans. The system also discourages saving by taxing any interest earned on savings. Nevertheless, it is clear that Grootland’s tax system does not consistently favor borrowing over saving, for if it did, there would be no______
(A) tax relief in Grootland for those portions of a taxpayer’s income, if any, that are set aside to increase that taxpayer’s total savings
(B) tax relief in Grootland for the processing fees that taxpayers pay to lending institutions when obtaining certain kinds of loans
(C) tax relief in Grootland for interest that taxpayers are charged on the unpaid balance in credit card accounts
(D) taxes due in Grootland on the cash value of gifts received by taxpayers from banks trying to encourage people to open savings accounts
(E) taxes due in Grootland on the amount that a taxpayer has invested in interest-bearing savings accounts
[Reveal] Spoiler: OA
Senior Manager
Senior Manager
avatar
Joined: 09 Feb 2011
Posts: 285
Concentration: General Management, Social Entrepreneurship
Schools: HBS '14 (A)
GMAT 1: 770 Q50 V47
Followers: 10

Kudos [?]: 114 [0], given: 10

GMAT Tests User
Re: tax releif on borrowings and tax on savings [#permalink] New post 05 Apr 2011, 22:06
The question stem gives examples as to how the tax system apparently favors borrowing over saving by giving tax reliefs on borrowing related money and putting taxes on saving related money. It then goes on to state that this is not consistently so, because _______. Which means we are looking for an option where savings money is getting tax relief or borrowing money is getting taxed.

Option E - implies that there are taxes on money invested in interest-bearing savings accounts- therfore savings money is being taxed. but we are looking for an eception example where savings money is being given some relief fom taation hence ncorrect.
D. implies that there are taxes on money (cash value) receievd as encouragemnt for saving. Taxing saving money again- hence incorrect option
C Implies that there are tax reliefs on credit card loans- borrowing is being encouraged- this cant be an exception . hence incorrect
B implies that there is tax relief on money spent while taking a loan or while borowing- hence encouraging borrowing. incorrect option.
A implies that there is tax relief on money that is being saved- thus encouraging savings. Hence only correct option.
Answer A
Senior Manager
Senior Manager
avatar
Joined: 12 Oct 2009
Posts: 272
Schools: Columbia, INSEAD, RSM, LBS
Followers: 2

Kudos [?]: 32 [0], given: 4

GMAT Tests User
Re: tax releif on borrowings and tax on savings [#permalink] New post 06 Apr 2011, 05:19
Good question, A is a clear winner
Re: tax releif on borrowings and tax on savings   [#permalink] 06 Apr 2011, 05:19
    Similar topics Author Replies Last post
Similar
Topics:
4 Experts publish their posts in the topic Which of the following, if true, most logically completes JAE WOO 12 18 Jun 2007, 12:21
Which of the following, if true, is the most logical AK47 5 14 Jan 2007, 03:11
Which of the following, if true, is the most logical rahulraao 3 04 Oct 2005, 17:06
Which of the following, if true, most logically completes saurya_s 13 16 Apr 2005, 10:35
Which of the following, if true, is the most logical Paul 5 22 Sep 2004, 13:11
Display posts from previous: Sort by

Which of the following, if true, is the most logical

  Question banks Downloads My Bookmarks Reviews Important topics  


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®.