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27 Dec 2025, 07:18
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A -> Correct. This suggests that the situation expressed in the conclusion reflects the same as excess savings will get consumed
B -> Unrelated sectors may or may not influence the current situation of consumer behavior
C -> Understanding of consumers does not dictate the situation brought about by the increase in interest rates
D -> This describes the reason for rising prices and not about consumer behavior. In fact, this weakens the argument.
E -> Other countries may or may have similar economic situations but also have other factors affecting it.
Option A
B -> Unrelated sectors may or may not influence the current situation of consumer behavior
C -> Understanding of consumers does not dictate the situation brought about by the increase in interest rates
D -> This describes the reason for rising prices and not about consumer behavior. In fact, this weakens the argument.
E -> Other countries may or may have similar economic situations but also have other factors affecting it.
Option A
Bunuel
27 Dec 2025, 07:27
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A Right answer. If interest rate hikes show a slow impact even when consumers have little savings, it's reasonable to expect an even slower impact when savings are high.
B It deals with inflation driven by factors other than consumer spending. Irrelevant.
C It suggests interest rates may be generally ineffective, independent of savings levels, undermining the claim.
D It undermines the argument by implying rate hikes could remain ineffective in the future as well.
E Weakens. If countries with little savings face ongoing inflation, it indicates savings aren't driving the delay in policy effects.
Answer A
B It deals with inflation driven by factors other than consumer spending. Irrelevant.
C It suggests interest rates may be generally ineffective, independent of savings levels, undermining the claim.
D It undermines the argument by implying rate hikes could remain ineffective in the future as well.
E Weakens. If countries with little savings face ongoing inflation, it indicates savings aren't driving the delay in policy effects.
Answer A
27 Dec 2025, 07:59
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Context: The economist argues that it is premature to conclude that further rate hikes won't work. The idea is that unusually high consumer savings are delaying the usual demand-reducing effect of higher interest rates. Once the savings go down, current rates should start lowering inflation.
Conclusion: Interest hikes in Country X may reduce inflation, the effect is delayed because excess savings are supporting the consumers.
Logical gap: The argument needs support for the idea that rate hikes take time to affect inflation
Evaluating choices
A) This directly addresses the logical gap. Previously, rate hikes take upto 18 months to affect inflation. This acts as an evidence to the claim that the hikes should start lowering inflation in future. This is a strengthener.
B) This is irrelevant. We are not concerned about the sectors unrelated to consumer demand
C) Consumer understanding do not affect inflation.
D) This is a weakener. It suggests that inflation is affected by wages and not demands.
E) This is also a weakener. This shows that the interest hikes are not working towards lowering inflation in other countries.
Conclusion: Interest hikes in Country X may reduce inflation, the effect is delayed because excess savings are supporting the consumers.
Logical gap: The argument needs support for the idea that rate hikes take time to affect inflation
Evaluating choices
A) This directly addresses the logical gap. Previously, rate hikes take upto 18 months to affect inflation. This acts as an evidence to the claim that the hikes should start lowering inflation in future. This is a strengthener.
B) This is irrelevant. We are not concerned about the sectors unrelated to consumer demand
C) Consumer understanding do not affect inflation.
D) This is a weakener. It suggests that inflation is affected by wages and not demands.
E) This is also a weakener. This shows that the interest hikes are not working towards lowering inflation in other countries.
Bunuel
