Banker: My country's laws require every bank to invest in its local co

Question

Banker: My country's laws require every bank to invest in its local community by lending money to local businesses, providing mortgages for local home purchases, and so forth. This is intended to revitalize impoverished local communities. But it is clear that the law will soon entirely cease to serve its intended purpose. An increasing number of banks incorporated in our country exist solely on the Internet and are not physically located in any specific community.

The banker's argument is most vulnerable to criticism on which of the following grounds?

The banker's argument is most vulnerable to criticism on which of the following grounds?

A. It overlooks the possibility that most banks that are physically located in specific communities in the banker's country are not located in impoverished communities.
B. It takes for granted that a law that ceases to serve its originally intended purpose no longer serves any other beneficial purpose, either.
C. It confuses a condition that would, if present, be likely to produce a given effect, with a condition that would probably be the cause if that effect were present.
D. It overlooks the possibility that even if there is a strong correlation between two phenomena, neither of those phenomena are necessarily causally responsible for the other.
E. It fails to adequately address the possibility that an increase in the number of banks of one kind in the banker's country will not lead to the complete elimination of banks of another kind.

CR53870.01

GMATIntensive · Accepted Answer

The Story     
 My country's laws require every bank to invest in its local community by lending money to local businesses, providing mortgages for local home purchases, and so forth.  - The banker says that his country’s laws require every bank to invest in the bank’s local community by doing (1) lending money to local businesses, (2) providing mortgages for local home purchases, or (3) other things. This is a straightforward fact about a current legal requirement in the country.

This is intended to revitalize impoverished local communities.   - This requirement to invest in local communities is intended to revitalize impoverished local communities. Even though the requirement seems to apply to all the local communities, it is intended to help impoverished communities. Also evident here is that this statement mentions a goal, and the previous statement talked about a currently active plan to achieve the goal.

But it is clear that the law will soon entirely cease to serve its intended purpose.   - There is a change in direction here. The banker makes a claim that the law will soon ‘entirely stop’ to serve its intended purpose. (Okay, that’s a huge claim. How can he say so? He’ll probably go on to tell us.)

An increasing number of banks incorporated in our country exist solely on the Internet and are not physically located in any specific community.  - This line supports the previous line. Impoverished local communities will stop getting helped by the law because an increasing number of banks do not physically exist in any community. (So, the law will not require these banks to help any specific community).

Gist:  The country’s laws require banks to invest in local communities in order to revitalize the poor ones. However   since more and more banks exist only online (support) ,   the laws will entirely stop helping revitalize the poor local communities (conclusion)  .

The Gap     
How will the existence of more and more banks solely online lead to completely stopping the laws from helping revitalize the poor communities?

Gap: Clearly, the banker makes the following assumptions:

1. Physical-banks will cease to exist
2. Purely-online banks are not covered under the laws

Let’s examine these assumptions:
If the banker did not believe that the physical-banks will cease to exist, could he conclude that the law will entirely stop revitalizing poor communities? No.
Similarly, if the banker believed that purely-online banks are also required by law to help revitalize the communities, would he give more such banks existing as the reason for his conclusion? He wouldn’t.
The argument fails to consider these scenarios.

The Goal     
We have to find an option that indicates a flaw in the argument. We already discussed two scenarios the argument fails to consider. Of course, there could be other scenarios that the argument has failed to consider. We have come up with only two. Doesn’t mean that there are only two such scenarios.

The Evaluation

A. It overlooks the possibility that most banks that are physically located in specific communities in the banker's country are not located in impoverished communities. 
  Incorrect  . Let’s first understand the possibility that this option talks about, and then we can see whether it’s a flaw in the argument that it overlooks such a possibility. The possibility is that most banks catering to specific communities are not catering to impoverished communities. Given that we know that the intended purpose of the law was to help impoverished communities, this possibility indicates that most banks catering to specific communities are already not serving the intended purpose of the law. However, some banks may be serving the intended purpose.

Moreover, even if we assume ‘most banks’ implies all such banks are not located in impoverished communities, that would tell us that the law is presently ineffective.

This possibility clearly doesn’t go against the banker’s argument. Thus, overlooking this possibility cannot be a flaw in the banker’s argument.

B. It takes for granted that a law that ceases to serve its originally intended purpose no longer serves any other beneficial purpose, either. 
  Incorrect  . The argument’s conclusion is: “the law will soon entirely cease to serve its intended purpose”. Thus, whether the law served any beneficial purpose other than the intended purpose is not relevant to the argument. Thus, this option cannot be a flaw in the argument.

C. It confuses a condition that would, if present, be likely to produce a given effect, with a condition that would probably be the cause if that effect were present. 
  Incorrect  . While we can reject this option directly since there is no confusion around different causes or cause and effect in the argument, let’s try to understand the meaning of the statement for the sake of learning.

The option says that the argument confuses an ‘X’ condition with a ‘Y’ condition.

X: a condition that would, if present, be likely to produce a given effect (i.e. if X is present, it’ll likely produce Z)
Y: a condition that would probably be the cause if that effect were present (i.e. if Z is present, Y is likely to be the cause of it)

The option says that the argument is confusing X with Y. However, the argument is talking about neither X leading to Z nor Y being the cause of Z.

D. It overlooks the possibility that even if there is a strong correlation between two phenomena, neither of those phenomena are necessarily causally responsible for the other. 
  Incorrect  . Since the argument doesn’t talk about any correlation and causation, this option is completely off. Even if we take the two phenomena to be (1) banks being physically present in local communities and (2) laws helping revitalize impoverished communities, the argument never discusses correlation or causation in their regard.

E. It fails to adequately address the possibility that an increase in the number of banks of one kind in the banker's country will not lead to the complete elimination of banks of another kind.  
  Correct  . This option is in line with the first gap we identified in the argument. The argument fails to address or consider the possibility that some non-internet banks may continue to exist or that an increase in internet banks will not lead to the complete elimination of non-internet banks that exist in specific communities. In this possibility, the argument ceases to hold since the law will not cease to serve its intended purpose.

Additional Notes

This argument follows a very common CR argument structure. The argument starts with mentioning an existing situation/ a trend/ a widely-held belief. The argument then concludes that what’s given in the previous statement is either not valid or will not remain valid. And then the author presents reason(s) for why that is so.

Similar official question:  It is widely assumed that people need to engage in intellectual activities

SC Notes:  The use of ‘this’ in the second sentence without a noun following it. ‘this’ refers to the entire first sentence.

Option D says “neither of those phenomena are…”. The use of a plural verb with ‘neither’ is informal, if not downright wrong.

If you have any doubts regarding any part of this solution, please feel free to ask.

gmatt1476 · Answer

Official Explanation

Argument Evaluation

This item requires us to identify a criticism to which this argument is vulnerable.

The argument is as follows: an increasing number of banks in a particular country exist in no specific community, but only on the Internet. The banker believes the country's law requiring banks to invest in their specific communities will soon cease to serve its purpose, namely, to help revitalize impoverished communities.

Note that the banker's conclusion is quite strong: The law will soon entirely cease to serve its intended purpose. The only reasons to believe that the law would entirely cease to serve its … purpose would be: (1) if circumstances led to the complete disappearance of banks that do exist in specific communities; (2) if somehow circumstances caused investment in impoverished local communities to fail to revitalize those communities.

A. To propose that most banks that are physically located in specific communities are not located in impoverished communities would, if anything, help support the banker's argument. That is, these banks would not have local communities in need of help, so the law would have little real effect on the impoverished communities it is intended to serve.

B. First, it is not clear that the argument does take for granted that the law will serve no other beneficial purpose even if it fails to serve its intended purpose. Even if the argument did take this statement as given, it does nothing to call into question the banker's argument.

C. The argument does not confuse cause and effect.

D. The argument does not confuse correlation with causation.

E. Correct. The argument's only reason given for its conclusion is that the number of Internet-only banks is growing. This does not mean, however, that banks within local communities will no longer exist, or that those banks' investments will fail to help revitalize impoverished communities. Even if the number of local banks declines, as long as some local banks remain, the law will not necessarily cease to serve its intended purpose.

The correct answer is E.

Sarjaria84 · Answer

Hi,

Even though I got this correct, before I went to the answers I thought the correct answer choice would be something on the lines "even though the new banks are only available online most of the local communities can still access these banks and thus it would not have an impact on the intended purpose of the law".

And I thought while reading option E that even if there's not a complete elimination of the physical banks but the impact is substantial then too the law will loose it's purpose.
But as option E was the best available choice I went through with it.

Isn't the word 'complete elimination' too strong for the option?

Thanks
Saurabh

AndrewN · Answer

Hello, Saurabh. It is good that you have caught on to a common trap of the GMAT™, namely the use of overreaching or absolute language. If you look at option (E) closer, though, it negates the absolute condition:

In other words, the argument does not take into account that just because the number of online banks is increasing does  not  mean that the number of local banks referred to in the passage will diminish to zero. It may be a possibility either way, but the banker makes it sound definitive. Thus, the banker is using language/thinking that is  too strong , to use your own words, while the correct answer points out that flaw in reasoning.

I hope that helps. (Good job on a tough question.)

- Andrew

shameekv1989 · Answer

I can't understand the impact of online banks compared to physical banks.

If online banks can serve the same purpose and that these online banks are subject to same conditions then they shouldn't have any impact per se.

Can someone elaborate on this aspect?

AndrewN · Answer

I understand your rationale,  shameekv1989 , but keep in mind, just because online banks  can  serve the same purpose as their physical counterparts does not mean that they  will . Because physical banks have, well, a particular location within an area, that bank is intended to serve that community. An online bank  could  serve the same community, but it could just as easily work with clients from around the country, or even non-citizens. With no physical address, such a bank might avoid local governmental oversight. For instance, if a country comprised 30 districts, and 50 online banks popped up within the country, how would the government determine which banks needed to invest in which communities? By examining IP addresses? Modem locations? Such banks would be operating against the  local  intention of the country's laws, and the argument in the passage would hold.

I hope that helps clarify the issue and allay your concerns; if not, feel free to ask away.

- Andrew

anaDarmas · Answer

This question is hard more so because of the language of the options.

The Banker is saying that since more banks have an online-only presence, the laws will not apply to them and the local communities will suffer.

There are two massive assumptions here: 
1. Online-only banks aren't subject to the same laws as physical banks
2. The existing physical banks will no longer be servicing these impoverished communities

E is exactly what we want. Unfortunately we've had to read through C and D which are painful but can be rejected. C talks about confusing two conditions which is not discussed in the argument. D talks about correlation between two events - again not present in our argument. A and B are easier to eliminate; A doesn't directly impact our conclusion and B is out of scope.

zoezhuyan · Answer

GMATNinja ,  GMATNinjaTwo ,  VeritasKarishma ,  AnthonyRitz ,  CJAnish ,  MartyTargetTestPrep , AndrewN , VeritasPrepBrian

Dear experts,

I am struggling with D.
for me, the two phenomenons stand to 
1) An increasing number of banks incorporated in our country exist solely on the Internet and are not physically located in any specific community. 
2)But it is clear that the law will soon entirely cease to serve its intended purpose.

I can catch that 1) is not necessary led 2)

even if there is a strong correlation between 1) and 2), neither 1) nor 2) is necessarily responsibility for other one.

So I picked up D.
 
but I am not sure my reasoning bug.

I genuinely need your explanation.

thanks in advance

AndrewN · Answer

Hello,  zoezhuyan . I think you might be overlooking the obvious. Notice that (D) is framed,  even if there is a strong correlation between two phenomena . Is such a  strong correlation  presented in the passage? Not that I can see. The question reminds me of another type of answer that pigeonholes a subset of a larger group and then spins a legitimate-sounding statement from it. An example might be something like the following:

Passage : Twenty students took a test for a class, and fifty percent of them failed, with an average of six questions missed.

Answer choice : Among students with the best scores, the average number of questions missed was zero to one.

The problem, of course, is that we have no idea what may constitute a student with the  best  score, and the passage would need to provide further information for us to qualify such an answer choice. Likewise, in the question at hand, we need more than a tenuous connection to a correlation for us to qualify (D). It should be one of the easier eliminations to make.

I hope that helps. Thank you for thinking to ask me about this tough question.

- Andrew

zoezhuyan · Answer

dear /url], AndrewN ,
thanks for your quick reply.
I have another question after reading your reply.

the phrase "even if" confused me a lot. IMO, this phrase introduces a reluctant agreement. and also I see it as a given condition, I need to assess the choice under this given condition.

appreciate for your help.

thanks in advance

AndrewN · Answer

I think your confusion,  zoezhuyan , may have stemmed from these two simple words. When I see  even if  at the head of a sentence, I do not automatically think of reluctant agreement; I think of a concession that might be used to further  an opposing view . A lawyer might argue, for instance, that  even if  the glove had fit the hand of his client, OJ Simpson, that fact in and of itself would not implicate the man of wrongdoing.

- Andrew

Basshead · Answer

I think what makes this question challenging is that we need to connect the dots very quickly.

"But it is clear that the law will soon entirely cease to serve its intended purpose. An increasing number of banks incorporated in our country exist solely on the Internet and are not physically located in any specific community."

This tells us that banks not physically located in the country will not have to abide by its local laws.

Choice A and B can quickly be eliminated. Choice C and D are there to take up valuable time. Under test conditions, I feel those would be tempting choices under pressure because they each take some time to process.

If we can get through C and D, then it's clear that E is the answer.

mSKR · Answer

Hi  AndrewN  Sir,

I have some issue in solving questions on :  argument is most vulnerable to criticism on which of the following grounds? 
Could you please give me some tips/strategy/methodology to tackle such questions?

Here in the question:

Law requires Bank to do something to bring some effects
Now banks are offline.

what is the flaw in argument?

Condition: law require bank to do something
Effect: revitalize impoverished local communities.
With a condition: something else responsible for revitalizing impoverished local communities
Nothing about another condition is mentioned

Argumen doesn’t consider :
1. Banks are present in community 
2. impoverished local communities

Not necessary to co-exist. 1 and 2 happen to be causally related with each other but not necessary depend on each other

Why not D then?

When i reached at E, i rejected E that such comparison is not talked about. I couldn't think more . I was already exhausted thinking exact meanings of C and D and not able to solve these type of questions of comfortably. Please suggest sir  AndrewN .

AndrewN · Answer

We have talked about approaching difficult questions before,  imSKR . I think you may still be falling into a bad habit of attempting to make heads or tails of an answer choice as soon as you lay eyes on it. Sometimes that proves difficult, and the time and mental energy you spend seeking to qualify everything on the spot hampers your performance. My suggestion? Allow yourself to make multiple passes of the answer choices. Anything you do not understand the first time can be placed on the back burner while you look to make sense of simpler answer choices. Sometimes you may luck out and find an answer that you cannot argue against. If so, pick it, and leave the others behind. Watch your accuracy go up and your timing go down. Do not forget, either, that such an approach can set you up for success on that next question, too. Rather than carry mental baggage from one question to another, you will be able to assess each question and its accompanying answer choices on their own merits. I have discussed (D) above, in my response to  zoezhuyan . As for (E), it touches on the absolute nature of the argument, namely that the argument seems to assume that online banks will replace physical banks  entirely  and thereby prevent the law from serving  its intended purpose .

With all of that said, this is a tough question that incorporates more "legalese" than a lot of other CR questions. Just study it for what it is, look to follow the linear logic of the passage, and make sure you are answering the question being asked.

- Andrew

mSKR · Answer

Indeed one of the toughest questions, options talk about soecific point as in D and C. but we need to find option that covers both 2 entities as in E.

Thanks  AndrewN  for the insights:)

jabhatta2 · Answer

Hi  GMATNinja   IanStewart   GMATGuruNY

- Struggling to parse option C exactly -- here is my attempt

Green : If  Condition 1  is present,  Condition 1  will produce Effect 1 
Blue : If Effect 2 is in true,  Condition 2  will be the cause of Effect 2 
----------------------------------------

Condition 1 -- country's laws require every bank to invest in its local community/ providing mortgages....
 Effect 1  -- revitalize impoverished local communities.
 Condition 2 -- An increasing number of banks are now solely on the Internet 
 Effect 2 ------ law will soon entirely cease to serve its intended purpose

(1) Is my parsing of option C accurate ?

IanStewart · Answer

Answer C may be difficult to understand on a first read, because it seems to suggest the argument is confusing two things that one might easily think are the same: it says the argument is confusing "condition exists, effect likely happens" with "effect happened, condition likely caused it". In test conditions, I wouldn't spend much time thinking about that distinction unless I needed to; I'd just move on to other answers first, and only return to C if no other answer seemed to fit.

It's easiest to understand the distinction in answer C if you imagine rare effects that can only have one cause. For example, if I become $50 million richer tomorrow, then I probably played the lottery, since there's no other plausible way that could happen. So if the effect "I make $50 million overnight" occurs, the condition "I just played the lottery" is probably present. But if I play the lottery, I'm not at all likely to become $50 million richer tomorrow, so when the condition "I played the lottery" is present, it is not likely to produce the effect that "I make $50 million". So C does distinguish two different logical situations, and in the language of logic, it's essentially suggesting that the argument is confusing one statement with its converse (when we know, logically, you can only replace a statement with its contrapositive, not with its converse). This has nothing to do with any error in the argument here, so C is not the right answer.

jabhatta2 · Answer

Hi  IanStewart  - Thank you for your response above. I cannot parse the green and blue to see how the green and the blue are converse. Could you please assist.

Specifically -

Per my understanding -- the following are considered converse statements 
 (A) If X, then Y
(B) If Y, then X

(A) and (B) are considered  converse  to each other.

But i dont see this pattern when i read the blue in option C unfortunately.

In the  green , mathetical mapping is 
(1) If X ,  then Y  -- This matches (A) above

But

In the  blue , mathematical mapping is 
(2) If Y,  then X is cause for Y --  This DOES NOT match (B) above

Thus, I dont see how (1) and (2) are converse off each other once (mapped mathematically)

jabhatta2 · Answer

DO NOT RESPOND -- Notes for me only . I think the words 'cause' | 'effect' | 'condition' were throwing me off.

You mentioned converse and i tried mapping.

If i understand, this is how the  green  vs the  blue   are showing the argument with its converse.

Green : If x is true, then y must be true 
 Blue  : If y is true, then x must be true

Green:  
 Condition : I played the lottery (Cause)
 Effect : I will win 50 million overnight, legally (Effect)

Blue : 
 Effect : I am worth 50 million overnight, legally (effect) 
 Condition is probably true : I played the lottery (cause)

Banker: My country's laws require every bank to invest in its local co

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GMAT Critical Reasoning (CR) Questions

Banker: My country's laws require every bank to invest in its local co

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

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