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Question 1
D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
64% (02:59) correct
36%
(02:36) wrong
based on 183
sessions
History
Date
Time
Result
Not Attempted Yet
Question 2
C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
15%
(low)
Question Stats:
74% (00:45) correct 26%
(00:53) wrong
based on 189
sessions
History
Date
Time
Result
Not Attempted Yet
Question 3
A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
49% (01:52) correct 51%
(01:58) wrong
based on 178
sessions
History
Date
Time
Result
Not Attempted Yet
Question 4
A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
70% (01:28) correct 30%
(01:45) wrong
based on 166
sessions
History
Date
Time
Result
Not Attempted Yet
New Project RC Butler 2019 - Practice 2 RC Passages Everyday
Passage # 456, Date: 16-Nov-2019
This post is a part of New Project RC Butler 2019. Click here for Details
Passage # 456, Date: 16-Nov-2019
This post is a part of New Project RC Butler 2019. Click here for Details
Between 1999 and 2006, there were two episodes during which inflation in the Consumer Price Index (CPI) diverged markedly from inflation in the index for Owner's Equivalent Rent (OER); early in 2007, these series began to diverge again. Such divergence often prompts many to question CPI methods. A key difference between these two series is that OER indexes are based upon rents which have received a utilities adjustment -- an adjustment which is necessary because the OER index is intended to track pure rent-of-shelter, not shelter-plus-utilities. Critics have claimed that the CPI-OER inflation divergences stem from inappropriate utilities adjustment.
This claim is false. There is only one divergence episode -- of only six months duration -- which is primarily attributable to the utilities adjustment procedure. Indeed, the utilities adjustment sometimes reduced potential divergence between the two series. Instead, the main factor is rental market segmentation; that is, different rent inflation rates were experienced by different parts of the rental market. Before 2003, the CPI-OER inflation divergence mainly resulted from divergent rental inflation rates within metropolitan areas: areas with a higher proportion of renters experienced higher rental inflation. Compared to other units, rent control units experienced higher inflation in 2004 (and, to a lesser extent, before mid-2001 and in 2006), which increased CPI Inflation but not OER inflation. Finally, in early 2007, there was a sizable divergence between OER and CPI inflation, again driven by divergent rental inflation rates within metropolitan areas. The extent of the divergence only becomes evident once the effect of the utilities adjustment is accounted for.
This claim is false. There is only one divergence episode -- of only six months duration -- which is primarily attributable to the utilities adjustment procedure. Indeed, the utilities adjustment sometimes reduced potential divergence between the two series. Instead, the main factor is rental market segmentation; that is, different rent inflation rates were experienced by different parts of the rental market. Before 2003, the CPI-OER inflation divergence mainly resulted from divergent rental inflation rates within metropolitan areas: areas with a higher proportion of renters experienced higher rental inflation. Compared to other units, rent control units experienced higher inflation in 2004 (and, to a lesser extent, before mid-2001 and in 2006), which increased CPI Inflation but not OER inflation. Finally, in early 2007, there was a sizable divergence between OER and CPI inflation, again driven by divergent rental inflation rates within metropolitan areas. The extent of the divergence only becomes evident once the effect of the utilities adjustment is accounted for.
1. It can be inferred from the passage that which of the following would most probably be a point of contention between the critics mentioned in the first paragraph and the author of the passage?
(a) why utilities adjustments are necessary when comparing the CPI and OER indices
(b) the definitional difference between the CPI and OER indices
(c) when rent control units experienced higher inflation that non-rent control units
(d) the underlying cause of CPI-OER inflation divergences
(e) when the CPI and OER indices have diverged from one another
2. The primary purpose of the passage is to
(a) evaluate methods used to measure rental inflation divergence
(b) summarize two arguments about rental inflation divergence
(c) refute an argument about rental inflation divergence
(d) reconcile conflicting arguments about rental inflation divergence
(e) reinterpret research findings about rental inflation divergence
3. According to the passage, which of the following is true of rent control units?
(a) The CPI and OER indices change to differing degrees based on the rate at which these units experience inflation.
(b) There are more rent control units in areas with a higher proportion of renters.
(c) Rent control units undergo utilities adjustments while non-rent-controlled units do not undergo such adjustments.
(d) There has only been one six-month inflation divergence episode among the inflation rates of rent controlled units.
(e) Rent control unit inflation is the primary factor influencing the OER inflation index, but is only marginally important in the CPI index.
4. According to the passage, which of the following is a key difference between inflation in the CPI index and inflation in the OER index?
(a) OER indexes are based on rents that have undergone utilities adjustments while the CPI Index is based on rents that have not undergone such adjustments.
(b) OER indexes are based on rental market segmentation while the CPI index is based on non-segmented rental markets.
(c) The inflation in the CPI Index has only experienced one divergence episode while inflation in the index for OER has undergone multiple divergence episodes.
(d) The CPI Index is meant to track rental inflation rates within metropolitan areas while the index for OER is meant to track rental inflation in rural areas.
(e) Methods for tracking inflation in the CPI Index are inferior to methods for tracking inflation in the index for OER.
Source: Knewton GMAT
05 Feb 2020, 21:25
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Took 7 mins to solve this passage.
Passage summary:
1996-2006 : 2episodes of divergence between CPI and OER.
< 2007: Multiple divergence between CPI and OER.
CPI : Rent without utilities adjustments(UA).
OER : Rent with utilities adjustments.
Critics: inappropriate UA.
Author : Critics wrong , UA actually reduces divergence between CPI and OER. Divergence due to rental market segmentation. explains rental market segment.
Explaination:
1. It can be inferred from the passage that which of the following would most probably be a point of contention between the critics mentioned in the first paragraph and the author of the passage?
(d) the underlying cause of CPI-OER inflation divergences --CORRECT. They point of contention is cause of divergence. Critics are of the opinion it is utilities adjustments(UA) but author says rental market segmentation.
2. The primary purpose of the passage is to
(c) refute an argument about rental inflation divergence --CORRECT. Author refuses the arguement not evaluate, summarize , reconcile or reinterpret what the critics believe is the reason for divergence.
3. According to the passage, which of the following is true of rent control units?
(a) The CPI and OER indices change to differing degrees based on the rate at which these units experience inflation. -- CORRECT
This is stated in the first paragragh "rent control units experienced higher inflation in 2004 (and, to a lesser extent, before mid-2001 and in 2006), which increased CPI Inflation but not OER inflation."
4. According to the passage, which of the following is a key difference between inflation in the CPI index and inflation in the OER index?
(a) OER indexes are based on rents that have undergone utilities adjustments while the CPI Index is based on rents that have not undergone such adjustments. -- CORRECT
This is stated in the first paragragh "A key difference between these two series is that OER indexes are based upon rents which have received a utilities adjustment"
Passage summary:
1996-2006 : 2episodes of divergence between CPI and OER.
< 2007: Multiple divergence between CPI and OER.
CPI : Rent without utilities adjustments(UA).
OER : Rent with utilities adjustments.
Critics: inappropriate UA.
Author : Critics wrong , UA actually reduces divergence between CPI and OER. Divergence due to rental market segmentation. explains rental market segment.
Explaination:
1. It can be inferred from the passage that which of the following would most probably be a point of contention between the critics mentioned in the first paragraph and the author of the passage?
(d) the underlying cause of CPI-OER inflation divergences --CORRECT. They point of contention is cause of divergence. Critics are of the opinion it is utilities adjustments(UA) but author says rental market segmentation.
2. The primary purpose of the passage is to
(c) refute an argument about rental inflation divergence --CORRECT. Author refuses the arguement not evaluate, summarize , reconcile or reinterpret what the critics believe is the reason for divergence.
3. According to the passage, which of the following is true of rent control units?
(a) The CPI and OER indices change to differing degrees based on the rate at which these units experience inflation. -- CORRECT
This is stated in the first paragragh "rent control units experienced higher inflation in 2004 (and, to a lesser extent, before mid-2001 and in 2006), which increased CPI Inflation but not OER inflation."
4. According to the passage, which of the following is a key difference between inflation in the CPI index and inflation in the OER index?
(a) OER indexes are based on rents that have undergone utilities adjustments while the CPI Index is based on rents that have not undergone such adjustments. -- CORRECT
This is stated in the first paragragh "A key difference between these two series is that OER indexes are based upon rents which have received a utilities adjustment"
31 May 2020, 21:25
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Paragraph1:
1999-2006: 2 episodes inflation in CPI diverge from inflation in OER
2007: diverse again
Issue with CPI methods?
Analysis: OER indexes based on rents utilities adjustment (necessary)
Critics claim: due to inappropriate utilities adjustment.
Summary: divergence is due to utilities adjustment which is necessary. Critics say: inappropriate adjustment
Paragraph2:
1. Only 1 time divergence
Analysis: due to Utilities adjustment procedure reason is Rental market segmentation:
Explanation: different rental inflation rates in different parts
/*
Mid 2001: rent control units experienced lower inflation
<2003: divergent rental inflation rates within metropolitan area ( higher proportion experience higher rental inflation)
2004: rent control units experienced higher inflation in 2004; increased CPI inflation but not OER inflation
2006: rent control units experienced lower inflation
2007: sizeable difference
*/
Prominent difference when utilities adjustment
Summary:
Author: divergence is due to utilities adjustment procedure:
Reason: different rental inflation rates in different parts
Points to note: Read to connect isolated points like a story. Ask question in mind.
1. It can be inferred from the passage that which of the following would most probably be a point of contention between the critics mentioned in the first paragraph and the author of the passage?
Agreement: due to utilities adjustment which is necessary.
(a) why utilities adjustments are necessary when comparing the CPI and OER indices
Author didn’t talk why it is necessary
(b) the definitional difference between the CPI and OER indices
Author didn’t talk about definitions in 2nd para
(c) when rent control units experienced higher inflation that non-rent control units
>>time of rent control units is not discussed in first para
(d) the underlying cause of CPI-OER inflation divergences- CORRECT
>> the cause is due to utilities adjustment( in first para :critics say it is because of inappropriate and author it is because of procedure utility adjustment.
(e) when the CPI and OER indices have diverged from one another
>> Author says: one divergence episode -- of only six months duration
Critics don’t talk about time line
Please notice: Between 1999 and 2006, there were two episodes—is like fact ( notice the verbs : “were”, “began” ). Later in 2nd para , he give judgment” This claim is false. And further explain reasons of this judgement based on analysis.
2. The primary purpose of the passage is to
>> what is cause of utilities adjustment
(a) evaluate methods used to measure rental inflation divergence
>> passage don’t talk about the methods
(b) summarize two arguments about rental inflation divergence
>> author is trying to analyze what is cause of utilities adjustment; but not summarizing different arguments.
(c) refute an argument about rental inflation divergence- Correct
>> author refutes about (argument- cause of utilities adjustment which is required due to) divergence between both series.
(d) reconcile conflicting arguments about rental inflation divergence
>> The extent of the divergence only becomes evident once the effect of the utilities adjustment is accounted for.; but he don’t reconcile with critics claim or 1st para facts. They still dnt have agreement on cause of utilities adjustment.
(e) reinterpret research findings about rental inflation divergence
>> where are research findings in passage? Even I assume findings are critics claim or initial lines of para taken from some research findings.
Still, the author in 2nd para: doesn’t reinterpret ( reinterpret means: agree and give new meaning) to research findings.
1. He doesn’t agree about number of episodes. 2. The argument is about cause of divergence required due to utility adjustment.
If reinterpret , there shouldn’t have disagreement.
3. According to the passage, which of the following is true of rent control units?
>>compared to other units, rent control units experienced higher inflation in 2004 (and, to a lesser extent, before mid-2001 and in 2006), which increased CPI Inflation but not OER inflation
(a) The CPI and OER indices change to differing degrees based on the rate at which these units experience inflation.-CORRECT
>> increased CPI Inflation but not OER inflation ( if affected only CPI but affect OER with zero degree)
(b) There are more rent control units in areas with a higher proportion of renters.
>> Quantity is not mentioned in para
(c) Rent control units undergo utilities adjustments while non-rent-controlled units do not undergo such adjustments.
>>Compared to other units, rent control units experienced higher inflation. Nothing is talked about these other units.
>> areas with a higher proportion of renters experienced higher rental inflation.( non rent don’t undergo adjustment?)
>> The choice is tempting. This kind of pattern is typical in RC questions where one option is given about what is not talked. E.g.: non- rent control units.
(d) There has only been one six-month inflation divergence episode among the inflation rates of rent controlled units.
>>Inflation happened multiple times but effect was prominent one time for 6 months.
(e) Rent control unit inflation is the primary factor influencing the OER inflation index, but is only marginally important in the CPI index.
>> it talks resulted in affecting increased CPI Inflation but not OER inflation ( importance or not importance is not talked )
4. According to the passage, which of the following is a key difference between inflation in the CPI index and inflation in the OER index?
Para1: OER indexes are based upon rents which have received a utilities adjustment
Para 2: CPI-OER inflation divergence mainly resulted from divergent rental inflation rates
(a) OER indexes are based on rents that have undergone utilities adjustments while the CPI Index is based on rents that have not undergone such adjustments.-CORRECT
>>OER index is intended to track pure rent-of-shelter, so OER indexes are based upon rents which have received a utilities adjustment -1st part is OK
>> rent control units experienced inflation increased CPI Inflation but not OER inflation ( so CPI is result of inflation but not undergoing adjustment)
Key points: adjustment happened with OER and result affected in CPI
(b) OER indexes are based on rental market segmentation while the CPI index is based on non-segmented rental markets.
>>OER indexes are based upon rents which have received a utilities adjustmentin 2nd para it says: key factor is rental market segmentation. – correct
>>Rent control units experienced higher inflation increased CPI Inflation. It is due to rental market segmentation; -Wrong
(c) The inflation in the CPI Index has only experienced one divergence episode while inflation in the index for OER has undergone multiple divergence episodes.
>> They are interrelated with each other ( diverge between both ); go hand in hand
(d) The CPI Index is meant to track rental inflation rates within metropolitan areas while the index for OER is meant to track rental inflation in rural areas.
>> OER index is intended to track pure rent-of-shelter (CPI is not talked about what it is intended to track) and what about rural areas is not mentioned.
(e) Methods for tracking inflation in the CPI Index are inferior to methods for tracking inflation in the index for OER
>>methods of inferiority are not talked about
1999-2006: 2 episodes inflation in CPI diverge from inflation in OER
2007: diverse again
Issue with CPI methods?
Analysis: OER indexes based on rents utilities adjustment (necessary)
Critics claim: due to inappropriate utilities adjustment.
Summary: divergence is due to utilities adjustment which is necessary. Critics say: inappropriate adjustment
Paragraph2:
1. Only 1 time divergence
Analysis: due to Utilities adjustment procedure reason is Rental market segmentation:
Explanation: different rental inflation rates in different parts
/*
Mid 2001: rent control units experienced lower inflation
<2003: divergent rental inflation rates within metropolitan area ( higher proportion experience higher rental inflation)
2004: rent control units experienced higher inflation in 2004; increased CPI inflation but not OER inflation
2006: rent control units experienced lower inflation
2007: sizeable difference
*/
Prominent difference when utilities adjustment
Summary:
Author: divergence is due to utilities adjustment procedure:
Reason: different rental inflation rates in different parts
Points to note: Read to connect isolated points like a story. Ask question in mind.
1. It can be inferred from the passage that which of the following would most probably be a point of contention between the critics mentioned in the first paragraph and the author of the passage?
Agreement: due to utilities adjustment which is necessary.
(a) why utilities adjustments are necessary when comparing the CPI and OER indices
Author didn’t talk why it is necessary
(b) the definitional difference between the CPI and OER indices
Author didn’t talk about definitions in 2nd para
(c) when rent control units experienced higher inflation that non-rent control units
>>time of rent control units is not discussed in first para
(d) the underlying cause of CPI-OER inflation divergences- CORRECT
>> the cause is due to utilities adjustment( in first para :critics say it is because of inappropriate and author it is because of procedure utility adjustment.
(e) when the CPI and OER indices have diverged from one another
>> Author says: one divergence episode -- of only six months duration
Critics don’t talk about time line
Please notice: Between 1999 and 2006, there were two episodes—is like fact ( notice the verbs : “were”, “began” ). Later in 2nd para , he give judgment” This claim is false. And further explain reasons of this judgement based on analysis.
2. The primary purpose of the passage is to
>> what is cause of utilities adjustment
(a) evaluate methods used to measure rental inflation divergence
>> passage don’t talk about the methods
(b) summarize two arguments about rental inflation divergence
>> author is trying to analyze what is cause of utilities adjustment; but not summarizing different arguments.
(c) refute an argument about rental inflation divergence- Correct
>> author refutes about (argument- cause of utilities adjustment which is required due to) divergence between both series.
(d) reconcile conflicting arguments about rental inflation divergence
>> The extent of the divergence only becomes evident once the effect of the utilities adjustment is accounted for.; but he don’t reconcile with critics claim or 1st para facts. They still dnt have agreement on cause of utilities adjustment.
(e) reinterpret research findings about rental inflation divergence
>> where are research findings in passage? Even I assume findings are critics claim or initial lines of para taken from some research findings.
Still, the author in 2nd para: doesn’t reinterpret ( reinterpret means: agree and give new meaning) to research findings.
1. He doesn’t agree about number of episodes. 2. The argument is about cause of divergence required due to utility adjustment.
If reinterpret , there shouldn’t have disagreement.
3. According to the passage, which of the following is true of rent control units?
>>compared to other units, rent control units experienced higher inflation in 2004 (and, to a lesser extent, before mid-2001 and in 2006), which increased CPI Inflation but not OER inflation
(a) The CPI and OER indices change to differing degrees based on the rate at which these units experience inflation.-CORRECT
>> increased CPI Inflation but not OER inflation ( if affected only CPI but affect OER with zero degree)
(b) There are more rent control units in areas with a higher proportion of renters.
>> Quantity is not mentioned in para
(c) Rent control units undergo utilities adjustments while non-rent-controlled units do not undergo such adjustments.
>>Compared to other units, rent control units experienced higher inflation. Nothing is talked about these other units.
>> areas with a higher proportion of renters experienced higher rental inflation.( non rent don’t undergo adjustment?)
>> The choice is tempting. This kind of pattern is typical in RC questions where one option is given about what is not talked. E.g.: non- rent control units.
(d) There has only been one six-month inflation divergence episode among the inflation rates of rent controlled units.
>>Inflation happened multiple times but effect was prominent one time for 6 months.
(e) Rent control unit inflation is the primary factor influencing the OER inflation index, but is only marginally important in the CPI index.
>> it talks resulted in affecting increased CPI Inflation but not OER inflation ( importance or not importance is not talked )
4. According to the passage, which of the following is a key difference between inflation in the CPI index and inflation in the OER index?
Para1: OER indexes are based upon rents which have received a utilities adjustment
Para 2: CPI-OER inflation divergence mainly resulted from divergent rental inflation rates
(a) OER indexes are based on rents that have undergone utilities adjustments while the CPI Index is based on rents that have not undergone such adjustments.-CORRECT
>>OER index is intended to track pure rent-of-shelter, so OER indexes are based upon rents which have received a utilities adjustment -1st part is OK
>> rent control units experienced inflation increased CPI Inflation but not OER inflation ( so CPI is result of inflation but not undergoing adjustment)
Key points: adjustment happened with OER and result affected in CPI
(b) OER indexes are based on rental market segmentation while the CPI index is based on non-segmented rental markets.
>>OER indexes are based upon rents which have received a utilities adjustmentin 2nd para it says: key factor is rental market segmentation. – correct
>>Rent control units experienced higher inflation increased CPI Inflation. It is due to rental market segmentation; -Wrong
(c) The inflation in the CPI Index has only experienced one divergence episode while inflation in the index for OER has undergone multiple divergence episodes.
>> They are interrelated with each other ( diverge between both ); go hand in hand
(d) The CPI Index is meant to track rental inflation rates within metropolitan areas while the index for OER is meant to track rental inflation in rural areas.
>> OER index is intended to track pure rent-of-shelter (CPI is not talked about what it is intended to track) and what about rural areas is not mentioned.
(e) Methods for tracking inflation in the CPI Index are inferior to methods for tracking inflation in the index for OER
>>methods of inferiority are not talked about
