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Stn
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Because of an economic downturn in Laconia 16 Aug 2016, 04:36
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C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!

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55% (hard)

Question Stats:

64% (02:03) correct 36% (02:30) wrong based on 1257 sessions

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Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep
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C
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Because of an economic downturn in Laconia 16 Aug 2016, 09:03
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Stn
Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep
Show more

During Last 2 Years : Sales decreased by 2%

Non repayment of credit on time

1st Year = Sharp Rise
2nd Year = Return to Normal

PRETHINKING Helps.... :beat :sleep :sleeping: :agrue: :stupid :hammer :writer

The reason can be something like : Retailers reduced Credit Purchase / Inventory Level...

Check Carefully only (C) matches...

If Manufacturers plan to close their unit , they will reduce their inventory level ( Close match to our PRE THINKING )

Hence Answer will be (C)
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Because of an economic downturn in Laconia 04 Dec 2016, 05:44
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Abhishek009
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Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep



During Last 2 Years : Sales decreased by 2%

Non repayment of credit on time

1st Year = Sharp Rise
2nd Year = Return to Normal

PRETHINKING Helps.... :beat :sleep :sleeping: :agrue: :stupid :hammer :writer

The reason can be something like : Retailers reduced Credit Purchase / Inventory Level...

Check Carefully only (C) matches...

If Manufacturers plan to close their unit , they will reduce their inventory level ( Close match to our PRE THINKING )

Hence Answer will be (C)
Show more




HI Abhishek..
Can you tell me WHAT IS THE PROBLEM WITH D?????
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Because of an economic downturn in Laconia 05 Dec 2016, 21:19
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IMO the problem with D is the following: The fact that more credit is given to the companies does not mean that the amount of credit not paid off drops. The reasons for not repaying the credit may still remain.

In C: The companies that do not repay the credit are the reason why the rate of unpaid credit rises. If those companies vanish the reason for the risen rate vanishes and it decreases to the former level.
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Because of an economic downturn in Laconia 06 Dec 2016, 13:32
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Abhishek009
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Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?

(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.

Source: OptimusPrep

During Last 2 Years : Sales decreased by 2%

Non repayment of credit on time

1st Year = Sharp Rise
2nd Year = Return to Normal

PRETHINKING Helps.... :beat :sleep :sleeping: :agrue: :stupid :hammer :writer

The reason can be something like : Retailers reduced Credit Purchase / Inventory Level...

Check Carefully only (C) matches...

If Manufacturers plan to close their unit , they will reduce their inventory level ( Close match to our PRE THINKING )

Hence Answer will be (C)
Show more

The answer option (C) talks about company units, and not about manufacturer's unit. Can you clarify further?
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Because of an economic downturn in Laconia 07 Dec 2016, 00:24
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abhishekaqsais


The answer option (C) talks about company units, and not about manufacturer's unit. Can you clarify further?
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C states that the companies that were closed had been unprofitable during the first year. During the 2nd year only those companies that were profitable survived and hence were able to pay the credit taken to the banks.
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Because of an economic downturn in Laconia 17 Dec 2016, 06:09
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suramya26


HI Abhishek..
Can you tell me WHAT IS THE PROBLEM WITH D?????
Show more

The occurrence that needs to be explained is:
why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?
In other words, why there was a decrease in the number of loan repayment default from first year to second year?

Option D states that more loans were given in the second year. Granting more loans does not help explain why there would be a decrease in the number of repayment defaults from first year to second year. Hence D is wrong.
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Because of an economic downturn in Laconia 22 Jul 2017, 10:43
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C is the correct answer.

most of the computer companies, which were unable to pay the due amount on due date were closed down. only the financially sound companies were left at the end of the second year. hence . proportion came back to normal during the 2nd year.
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Because of an economic downturn in Laconia 30 Jan 2018, 10:51
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suramya26


HI Abhishek..
Can you tell me WHAT IS THE PROBLEM WITH D?????

The occurrence that needs to be explained is:
why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?
In other words, why there was a decrease in the number of loan repayment default from first year to second year?

Option D states that more loans were given in the second year. Granting more loans does not help explain why there would be a decrease in the number of repayment defaults from first year to second year. Hence D is wrong.
Show more

sayantanc2k Option B is incorrect because merely using advertising may be a possible reason but not a sure shot reason for a decrease in the number of repayment defaults from first year to second year. Is this reasoning accurate??
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Because of an economic downturn in Laconia 17 Jan 2022, 04:54
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Stn
Because of an economic downturn in Laconia, annual sales of computer companies decreased by roughly 8 percent over the last two years. Computer manufacturers that supply Laconian computer companies have noticed that the proportion of credit given to computer companies operating in Laconia and not paid off on time sharply increased over the first year of the crisis but returned to its normal level during the second year.
Which of the following, if true, best helps explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn?
Show more

We need an explanation that explains the above-highlighted portion.

Quote:
(A) Sales of computer companies specializing in repairing and selling used computers did not decrease during the first year of economic downturn.
Show more
We are not concerned about one specialized companies in the computer market. - Irrelevant and doesn't explain why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn - INCORRECT
Quote:
(B) During the second year of the economic downturn, many computer companies tried to increase their sales by launching advertising campaigns.
Show more
Although companies tried but did they succeed in increasing sales ? Moreover, did the sales made them reach the level where they can repay loans , and even if they did reach, the companies repaid the manufacturers the money on time? - This choice doesn't explain anything. -INCORRECT .
Quote:
(C) Most computer companies that experienced financial difficulties before the economic downturn closed during its first year.
Show more
OK, Suppose there are 10 companies out of which 7 were experiencing financial difficulties already and the rest 3 are doing well.After first year, these 7 companies shut down, now we don't have defaulters, improving and bringing the proportion level to normal. CORRECT
Quote:
(D) During the second year of the economic downturn, many computer manufacturers increased the total amount of credit extended to computer companies in Laconia.
Show more
Increasing the loan amount to companies doesn't tell us whether that amount is returned on time. Also, more loan amount may lead to more delay in repayment. - INCORRECT
Quote:
(E) At the beginning of the second year, the government of Laconia increased the tax rates for computer companies.
Show more
Tax increase may even worsen the situation of companies. Doesn't address why the proportion of credit not paid off on time returned to its normal level during the second year of the economic downturn. INCORRECT


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Because of an economic downturn in Laconia 21 Apr 2026, 08:12
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