A recession is not caused by any economic force other than a nationwid

Question

A recession is not caused by any economic force other than a nationwide loss of confidence. If the economy is perceived as being unstable, banks are conservative in lending money, investors take fewer risks, and hence economic growth is slowed.

Which of the following, if true, would most strengthen the argument above?

A. A recession is severely affected by the response of the Federal Reserve’s setting of interest rates.

B. A recession can be brought on by the failure of a major bank that had been loaning money.

C. Slowed economic growth is not the only result of a recession.

D. When investors begin taking greater risks it is enough to stimulate economic growth.

E. It is a fallacy to assume that economic growth is necessary for economic stability.

icandy · Answer

Wow! is all I can say.. Tough one my choice E

Source OA & OE?

alpha_plus_gamma · Answer

Recently, I have started looking at every CR question from If->Then construction perspective first and this one is perfect if then question

IMO answer should be D.

For any if X-> then Y, construction, only thing we can conclude is if NOT Y -> then NOT X. .....(Let me call this rule A.)

Here we are given:
1) nationwide loss of confidence is the only cause of recession.

1) If {economy is NOt stable} -> Then {banks are conservative} -> Then {investors take fewer risks} -> Then { Slow economic growth}

HTH

AndersonBound · Answer

I'm going to go with D.

Here are my thoughts:
Given - Recession is caused from a loss of confidence. If the economy appears to be bad, investors / banks get conservative and therefore the economy slows (recession).

Which option strengthens the opinion?
A - out of scope; no mention of the Fed.
B - while it may be true, a failed bank bringing about a recession does not help the author's argument.
C - out of scope; again, looking for points to help the author's point.
E - out of scope; we don't care about economic stability.

D - tells us that if investors take risks, the economy grows. This mates with the given info. If investors do not take risks, the economy slows. If they take risks, the economy will be stimulated.

bibha · Answer

Is D the OA?? I think "enough to stimulate economic growth" is too extreme, isn't it?

iwillcrackgmat · Answer

A recession is severely affected by the response of the Federal Reserve’s setting of interest rates. --> Weakening the argument

A recession can be brought on by the failure of a major bank that had been loaning money. --> Weakening the argument

Slowed economic growth is not the only result of a recession. --> Neither weakens nor strengthens

When investors begin taking greater risks it is enough to stimulate economic growth. --> strengthens the argument

It is a fallacy to assume that economic growth is necessary for economic stability. --> Neither weakens nor strengthens

kraizada84 · Answer

okay D is best here.
E just weakens the argument by reversing the conditional statement.

chesstitans · Answer

what is the main conclusion in this question?
what is the answer?

chesstitans · Answer

B, or D must be the answer. 
I picked B, but now I think D is correct 
use the negation technique, if inventors do not take greater risks, there will bo no stimulate for economic growth => economy slows down

Madhavi1990 · Answer

I would like to know if D isnt a bit too extreme - the logic begins from'loss of confidence' (presumably certain economic conditions) to banks lending less and then investors suffering --> it doesnt seem that it starts with the investors that D implies.

"When investors begin taking greater risks it is
enough to stimulate economic growth." -- if we put this in the context above - investors CANNOT take a risk because something else stops them (banks). It is not just dependent on them.
E - "It is a fallacy to assume that economic growth
is necessary for economic stability." -- it says, economic growth is not required for economic stability (risk taking is);and it strengthens the main argument.

Please explain why OA is D

chesstitans · Answer

the first sentence is the main argument, and the second sentence is an example.
D is relating to both sentences => D is correct. 
ALso, all other options are out of scope.

longhaul123 · Answer

what is the source of this question?

GMATNinjaTwo · Answer

As described in the  Rules to post on the Verbal Forum , please tag questions with the source, category, and difficulty level. Also, enter the questions exactly as they appear in the original source.

Thanks!

UtkarshBisaria · Answer

I think this question is flawed for following reasons:

1. Opposite of fewer is not greater.
2. Conditionals application isn't quite correct in the above explanations in my opinion.

D says Greater Risks -> Stimulate economic growth.

Passage says fewer risks -> slow economic growth. Contrapositive to this is "not slow economic growth" -> "not fewer risks".

Now let's ignore for a moment that "not slow" = "fast" and "not fewer" = "greater" then the relation would become "fast economic growth" -> "greater risks".

But option D says opposite of this, so even the contrapositive relation that can be inferred from the argument is opposite of what D says.

Please correct me if I am wrong, thanks!

guddo · Answer

A recession is not caused by any economic force other than a nationwide loss of confidence. If the economy is perceived as being unstable, banks are conservative in lending money, investors take fewer risks, and hence economic growth is slowed.
 
 Which of the following, if true, would most strengthen the argument above?

The argument says loss of confidence causes banks and investors to act cautiously, which slows economic growth and leads to recession. To strengthen it, we want support for the idea that investor risk-taking is connected to economic growth.  If greater risk-taking is enough to stimulate growth , then reduced risk-taking caused by loss of confidence could plausibly slow growth.

A. A recession is severely affected by the response of the Federal Reserve’s setting of interest rates.

This weakens or distracts. It points to another economic factor affecting recession.

B. A recession can be brought on by the failure of a major bank that had been loaning money.

This weakens the argument. It gives another possible cause of recession besides nationwide loss of confidence.

C. Slowed economic growth is not the only result of a recession.

This does not strengthen the cause of recession. It discusses effects of recession.

D. When investors begin taking greater risks it is enough to stimulate economic growth.

This is correct. It supports the argument’s mechanism: investor risk-taking affects economic growth. So if loss of confidence makes investors take fewer risks, economic growth may slow.

E. It is a fallacy to assume that economic growth is necessary for economic stability.

This weakens the argument by challenging the connection between economic growth and stability.

Answer: (D)

egmat · Answer

Hi UtkarshBisaria,

Your logic is sharp, and the contrapositive you wrote down is actually correct. The issue isn't your conditional work; it's that you're applying  entailment  rules to a  strengthen  question. Those are two different jobs.

What the argument is really doing

The author isn't laying down a formal "if-then" rule. They're proposing a  causal chain :

loss of confidence -> banks lend conservatively -> investors take fewer risks -> growth slows.

The conclusion the author wants you to buy is that this mechanism is real - that the  risk-taking  link genuinely drives growth. A strengthener doesn't have to be logically forced by the passage. It just has to make this causal story more believable.

Why your contrapositive isn't the test here

You're right that the contrapositive of "fewer risks -> slow growth" is "not-slow growth -> not-fewer risks," i.e., "growth stimulated -> greater risks." And you're right that D states the  converse  of that: "greater risks -> growth stimulated."

The converse isn't logically guaranteed - true. But in a Strengthen question, we're not asking what's guaranteed. We're asking:  does this make the author's mechanism more plausible?  If we can confirm that "more risk-taking" actually does push growth up, then the author's claim that "less risk-taking pushes growth down" looks much more credible. D plugs in exactly that confirmation, in the active direction.

A quick stand-in

Suppose someone argues:  "When it rains, the streets get wet."

- Contrapositive: dry streets -> it didn't rain. (Logically forced.)
- Converse: wet streets -> it rained. (Not logically forced - could be a burst pipe.)

Now imagine a Strengthen question on that argument, and an option says:  "In repeated tests, every confirmed rain event was followed by wet streets."  That's the converse-style claim - not entailed, but it  supports  the causal link. That's exactly D's role here.

So the answer is D - not because the passage forces it, but because it  reinforces  the very link the author's chain depends on.

Answer: D

A recession is not caused by any economic force other than a nationwid

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A recession is not caused by any economic force other than a nationwid

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615 to 715 in 15 Days (Ria's Strategies)

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