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Business are suffering because of a lack of money available for develo

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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 29 Mar 2017, 01:10
HI , expert
please explain option E i got stuck in option A & E please, what i have understood about option E that if all taxpayer get the same flat saving incentive then it is most likely that most taxpayer don't deposit money in retirement savings ac as whether they deposit more or less they would get same tax savings, is not it ? please clarify
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 06 Apr 2017, 20:13
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please explain option E i got stuck in option A & E please, what i have understood about option E that if all taxpayer get the same flat saving incentive then it is most likely that most taxpayer don't deposit money in retirement savings ac as whether they deposit more or less they would get same tax savings, is not it ? please clarify


Hi nks2611, good question! You stated, "whether they deposit more or less they would get same tax savings"; however, notice the wording in choice E...

Quote:
(E) The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings.


This does not say that taxpayers will get the same tax savings regardless of how much they deposit in retirement savings accounts; rather, it says that taxpayers will, regardless of their incomes, get "the same tax savings for a given increase in their retirement savings." Therefore, according to choice E, if two taxpayers have different incomes but make identical increases in their retirement savings, then both would get the same tax savings. This does not mean, as I believe you understood, that two taxpayers will get the same tax savings even if the amount by which one increases his/her retirement savings is much greater than that of the other taxpayer. Thus, even if choice E is true, a taxpayer could save more by putting more money into retirement savings accounts.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 07 Aug 2017, 08:37
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zhenmaster wrote:
Business are suffering because of a lack of money available for development loans. To help businesses, the government plans to modify the income-tax structure in order to induce individual taxpayers to put a larger portion of their incomes into retirement savings accounts, because as more money is deposited in such accounts, more money becomes available to borrowers.

Which of the following, if true, raises the most serious doubt regarding the effectiveness of the government's plan to increase the amount of money available for development loans for businesses?

(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly

(B) The increased tax revenue the government would receive as a result of business expansion would not offset the loss in revenue from personal income taxes during the first year of the plan.

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.

(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules.

(E) The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings.


PREMISE: Businesses suffering due to lack development loans
PREMISE: Government's proposed changes will induce taxpayers to put more money into savings accounts
CONCLUSION: This will help businesses
UNWRITTEN CONCLUSION: There will be more money available for BUSINESSES to borrow

As we examine each answer choice, we should ask "Does this weaken the conclusion that there were be more money available for BUSINESSES to borrow?"

(A) When levels of personal retirement savings increase, consumer borrowing always increase correspondingly
Does this weaken the conclusion that there were be more money available for BUSINESSES to borrow?
YES! It says that consumer borrowing will DEFINITELY increase. So, there may NOT be more money available for BUSINESSES to borrow

(B) The increased tax revenue the government would receive as a result of business expansion would not offset the loss in revenue from personal income taxes during the first year of the plan.
Does this weaken the conclusion that there were be more money available for BUSINESSES to borrow?
NO. ELIMINATE

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.
Does this weaken the conclusion that there were be more money available for BUSINESSES to borrow?
MAYBE
The key word here is SOME. On the GMAT, "some" means 1 or more.
So, if "some" means one, then we're basically saying that everyone (except for one person) will put more money into retirement savings accounts. Does this weaken the conclusion? No.
Alternatively, if "some" means 99% of the population, then we're saying that almost no one will put more money into retirement savings accounts. Does this weaken the conclusion? Yes.

(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules.
Does this weaken the conclusion that there were be more money available for BUSINESSES to borrow?
NO. ELIMINATE

(E) The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings.
Does this weaken the conclusion that there were be more money available for BUSINESSES to borrow?
NO. ELIMINATE

So, we're down to A or C. They're both decent answers.
I'd go with A, because it uses stronger language (consumer borrowing always increases).

Cheers,
Brent
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New post 21 Dec 2017, 12:27
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Business are suffering because of a lack of money available for development loans. To help businesses, the government plans to modify the income-tax structure in order to induce individual taxpayers to put a larger portion of their incomes into retirement savings accounts, because as more money is deposited in such accounts, more money becomes available to borrowers.

Which of the following, if true, raises the most serious doubt regarding the effectiveness of the government's plan to increase the amount of money available for development loans for businesses?

(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly. -Correct. If the borrowings of people will also increase, then the money available to business will also be less.

(B) The increased tax revenue the government would receive as a result of business expansion would not offset the loss in revenue from personal income taxes during the first year of the plan. -business expansion is out of scope

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings. -That means most people will increase their savings, thus strengthening the argument

(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules. -If bank's won't lend the money then this tax increment is out of question. Out of scope of argument

(E) The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings. -out of scope
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 22 Dec 2017, 09:01
Business are suffering because of a lack of money available for development loans. To help businesses, the government plans to modify the income-tax structure in order to induce individual taxpayers to put a larger portion of their incomes into retirement savings accounts, because as more money is deposited in such accounts, more money becomes available to borrowers.

Which of the following, if true, raises the most serious doubt regarding the effectiveness of the government's plan to increase the amount of money available for development loans for businesses?

(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly. - If, by inducing individual tax payers to put a larger portion of their incomes into retirement savings accounts causes consumer borrowing to increase correspondingly, then net change is 0. Hence the plan becomes ineffective.

(B) The increased tax revenue the government would receive as a result of business expansion would not offset the loss in revenue from personal income taxes during the first year of the plan. - Yes. It maybe true that increased tax revenue the government would receive would not offset the loss in revenue from personal income taxes, but this will increase the money available for development loans for businesses.

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings. - Who cares about those people, who will choose not to increase their levels of retirement savings. If the remaining people choose to increase their level of retirement savings, thats more money for development loans

(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules. - Does not answer the question about whether the government's plan is effective

(E) The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings. - If this is true, this could strengthen the argument.

Hence A :shocked weakens the government's plan
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 25 Dec 2018, 11:19
Business are suffering because of a lack of money available for development loans. To help businesses, the government plans to modify the income-tax structure in order to induce individual taxpayers to put a larger portion of their incomes into retirement savings accounts, because as more money is deposited in such accounts, more money becomes available to borrowers.

Simplified Argument: Businesses are unable to get loans. So the government will come out with a tax scheme that encourages taxpayers to put a larger sum of money into retirement accounts. That way more money will be available for borrowers.

Pre thinking: In what scenario will more money not be available to businesses?

Weakener 1: What if people change their behavior when they come to know about this scheme? i.e they start withdrawing from other accounts to increase the money in these retirement accounts? That way still no net increase in available money would be there.

Which of the following, if true, raises the most serious doubt regarding the effectiveness of the government's plan to increase the amount of money available for development loans for businesses?


(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly.
In line with the pre thinking. If people also borrow more money, overall there is no increase in money available with banks to provide loans.

(B) The increased tax revenue the government would receive as a result of business expansion would not offset the loss in revenue from personal income taxes during the first year of the plan.
Taxes received by the government have no impact on the argument concerning money available to businesses,

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.
If a minority of people don't change their behavior it's not an issue. The larger segment could still act as desired by the government.

(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules. Okay. So what? We are talking about one segment of businesses: those who can't meet their loans. The statement has no impact on the argument that deals with money available to be lent to businesses

(E) The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings. Okay this means the savings are independent of the income. So what? This doesn't weaken the argument. We could still have a surplus to distribute to the businesses.

By far, choice A is the best.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 07 Jun 2019, 18:25
(A) can be derived from thinking about the argument this way:

The governement assumes that banks will redistribute the additional money they receive through business development loans, but the validity of this assumption can be challenged when we think about other potential methods by which the bank can redistribute the additional funds they receive.

Enter answer choice (A)

(A) states that consumers will borrow a correspondingly larger amount of money if they increase their personal retirement savings - hence another method by which the banks will distribute the additional funds they receive.
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Business are suffering because of a lack of money available for develo  [#permalink]

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New post 22 Jun 2019, 00:37
WEAKEN
CONCLUSION : govt plan will result in more money available for development lones
GOAL: Govt plan result in less money available for development loans

(CORRECT)as money available after govt plan will go in customer borrowing so less money will be available for development loans so this is the answer
(NARROW)—talks only about 1st year of plan
(NARROW)—talks about some people
(NARROW)– only talk about some buisneeses who cannot repay
(IRRELEVANT)—we are not concerned about savings
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Business are suffering because of a lack of money available for develo   [#permalink] 22 Jun 2019, 00:37

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