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

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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.

(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.


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Originally posted by zhenmaster on 28 Mar 2008, 11:18.
Last edited by Bunuel on 08 Oct 2018, 06:26, edited 1 time in total.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 23 Dec 2017, 13:09
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The government wants to increase the amount of money available for development loans for businesses. How does the government plan to do that?

  • The government plans to modify the income-tax structure.
  • The modifications are supposed to induce individual taxpayers to put a larger portion of their incomes into retirement savings accounts.
  • As more money is deposited into retirement savings accounts, more money becomes available to borrowers.

The government hopes that increasing the money available to borrowers will increase the amount of money available for development loans for business, but is that necessarily the case? We need to select the answer choice that raises the most serious doubt regarding the effectiveness of the government's plan.

Quote:
(A) When levels of personal retirement savings increase, consumer borrowing always increase correspondingly.

The government wants to modify the income-tax structure to make people put more of their income into retirement savings accounts. This should increase the amount of money available to borrowers. But will that money go to development loans for business? What if that money goes to other kinds of loans?

Choice (A) tells us that consumer borrowing WILL increase if personal retirement savings increases. So more money will become available for borrowing, but consumers will borrow some or all of that money. That leaves less (if any) money for development loans. It's possible that some of that money will be used for development loans and that the government's plan will still succeed, but choice (A) raises a serious doubt. Hang on to this one.

Quote:
(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.

Choice (B) tells us that the government will suffer a net loss in revenue as a result of this plan. But we are not trying to determine how the plan will impact the government's revenue. We are simply trying to determine whether the plan will succeed in increasing the amount of money available for development loans for businesses. Choice (B) is irrelevant and can be eliminated.

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

It's okay if SOME people chose not to increase their levels of retirement savings. As long as some people DO increase their levels of retirement savings, the government's plan could still work. In other words, we don't need ALL people to increase their savings, only some. Choice (C) does not raise serious doubt and can be eliminated.

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

This is obviously a problem for those businesses whose prospective earnings are insufficient to meet their loan repayment schedules. But we are not concerned with that situation. We simply want to know whether the modifications to the income-tax structure will increase the amount of money available for development loans for business. As long as the amount available for such loans increases, the government's plan will be a success, regardless of whether some businesses can't access that money because they've had problems paying off their loans. Eliminate (D).

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.

A possible misunderstanding of choice (E) is to conclude that taxpayers will get the same tax savings regardless of how much they deposit in retirement savings accounts. That might give people less incentive to increase their retirement savings (i.e. "Why should I put more into my retirement savings if it won't increase by tax savings?") and thus jeopardize the government's plan.

But this is not what choice (E) says. Rather, it says that taxpayers will, regardless of their incomes, get "the same tax savings for a given increase in their retirement savings." In other words, if two taxpayers have different incomes but make identical increases in their retirement savings, then both would get the same tax savings. Thus, choice (E) does not affect the government's plan to induce individual taxpayers to put a larger portion of their incomes into retirement savings accounts. Eliminate (E).

Choice (A) is the best answer.
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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 Feb 2012, 16:45
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Hi, there. I'm happy to help with this. :)

The argument:
Businesses 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.

In a nutshell --- if we tweak the tax system to encourage folks to put more into their retirement accounts, then presto, more money for loans will be available to business.

Prompt:
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?

So, which answer effectively says -- make those changes to the tax code, and there won't be as much money for loans available to business?

(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly.
OK, so when people put more into their retirement, they wind up borrowing more. That would mean, private citizens en masse would be competing with business for that loan money --- that would mean less money for loans available to business. A possible right answer.

(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.
Making this change to the tax code could wind up hurting the government --- interesting, but not relevant to the argument. The argument is strictly about: will business have more money available for loans? What happens to the government is irrelevant to this argument. (B) is out.

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.
This argument above is a macroeconomics argument. It's about changes in the entire tax-system, the entire banking system, etc. Of course, not every private citizen will follow the tax incentive. Tax incentives are given with the idea that only a certain percentage of the population will respond to them. So, some private citizens won't respond to the tax incentive. So what? That's 100% predictable, and not relevant to the big macroeconomic argument at hand. (C) is out.

(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules.
Well, anyone -- a household or a business --- that fails to meet loan payments is not going to be wildly successful getting more loans. That's pretty obvious. There's absolutely nothing in the original argument suggesting that the businesses discussed are so strapped for money that they all are defaulting on their loans. The business are "struggling" insofar as they can't take out loans to fund R&D, which would grow already thriving businesses. My business is making money already, and I want to to R&D to grow it, but there's no money for loans so I can pursue that R&D --- that's the problem we are addressing, according to the original argument. The problem of some business defaulting on their loans --- that's something separate, not relevant to this argument. (D) is out.

(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.
Again, this is a macroeconomic argument. What matters it the total revenue taken in by the government. Let's say, because of this tax code change, retirement accounts get an additional $1 billion, and that new money is available for loans to business. That $1 billion could have come from everybody in the whole socioeconomic spectrum making an equal contribution, or it could have come from rich people putting in much much more than middle class people. From the business standpoint, once they have that $1 billion available for loans, they don't give a flying figtree where it came from. From the business point of view, it's completely irrelevant how the government goes about raising that money; the specifics of allocation by various socioeconomic classes doesn't matter at all. (E) is out.

Thus, answer (A) is the only one that poses a direct attack on the argument, so that's the answer.

Does that make sense?

Here's another free CR practice question of a similar type.

http://gmat.magoosh.com/questions/1257

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Let me know if you have any other questions.

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

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New post 14 May 2010, 11:13
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I picked the wrong OA too.....but after reading thru the explanation I understand that I was wrong.

The premise mean to say that as more money is deposited in such
accounts, more money becomes available to borrowers ( business borrowers).

Now A says that as personal retirement savings increase, consumer borrowing always increases correspondingly.....the important point here is that consumer borrowing is different from business borrowing

The government is intending to increase retirement savings so that businesses can borrow but what if because of increase in retirement savings end consumers borrowing also increases correspondingly....this will defeat the purpose of the 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 28 Mar 2008, 16:00
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I think its C.
the governments assumption is that the individual taxpayers are going to put more money into retirement savings. C weakens that assumption


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 taxpapyers 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 increase correspondingly -- consumer can be both individual and businesses
B. The increased tax revenue the government would receive as a result of business expansino would not offset the loss in revenue from personal income taxes during the first year of the plan. -- It can be after one year....there is no mention of time constarint anywhere
C. Even with tax incentives, some people will choose not to increase their levels of retirement savingsIf people dont put any more money then the Govt.'s plan failsD. Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules.Nothing related to the Govt.'s plans
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. Strengthens


What do you think?
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New post 29 Mar 2008, 05:24
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I feel its A.

If consumers borrow more, then the money left for development loans remains the same or reduces.

C is not correct, because "some" people may choose not to increase retirements, but some will, hence there will be at least some more money going to the bank to be available for loans.

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 taxpapyers 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 increase correspondingly
B. The increased tax revenue the government would receive as a result of business expansino 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.
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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 2008, 05:35
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The answer is A according to me. We need to find something that would suggest that more money might not be available for business to borrow. Answer A explains the reason, if people borrow more than money may not be available for businesses to borrow.

C states that some might not take advantage of tax incentives but that does not mean all the people will choose to do so. More people might still take advantage of tax incentives and hence it leaves open a possibility that more money might be available for businesses to borrow.

Can you please tell us the OA.

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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 2009, 13:42
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Fact1: Businesses are suffering because of a lack of money available for development loans.
Fact 2: 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
Conclusion: Because as more money is deposited in such accounts, more money becomes available to borrowers.
Weakness: Do the people actually put money in their retirement accounts? This is not the right weakness as it's mentioned in the fact section and not the conclusion section.(hence C is incorrect).

Right Weakness: Money deposited into retirements accounts might not result is more money available to borrowers (Mentioned in the conclusion).
Scan through the choices which states this -
A looks like the closest match.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 14 May 2010, 03:47
Even I marked C but I doubt the OA in OG. The last line of argument says that -

because as more money is deposited in such accounts, more money becomes available to borrowers.


While A says that -
(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly.

This is ambiguous. I think to make this a correct argument, the last line of the passage should have been -
because as more money is deposited in such accounts, more money becomes available to bankers/lenders.


Experts, please comment.
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New post 28 Apr 2011, 03:09
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C states 'Even with tax incentives, some people will choose not to increase their levels of retirement savings.'

but that also means some people will choose to increase their levels of retirement savings, hence funds available for borrowing will still increase. and that increase amount will be available for businesses to borrow.

so C doesn't weaken the conclusion .

A states that number of borrowers will increase , this may result in even lesser funds for businesses to borrow than were previously available.

hence A seriously weakens the conclusion
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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 Feb 2012, 20:31
Quote:
The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings.
Again, this is a macroeconomic argument. What matters it the total revenue taken in by the government. Let's say, because of this tax code change, retirement accounts get an additional $1 billion, and that new money is available for loans to business. That $1 billion could have come from everybody in the whole socioeconomic spectrum making an equal contribution, or it could have come from rich people putting in much much more than middle class people. From the business standpoint, once they have that $1 billion available for loans, they don't give a flying figtree where it came from. From the business point of view, it's completely irrelevant how the government goes about raising that money; the specifics of allocation by various socioeconomic classes doesn't matter at all. (E) is out
E) .

Thanks am just wondering - if the tax incentives are not good enough to incentivise the richer sections who have the means to contribute more, then there is a possibility that the scheme will not collect as much funds thus reducing the loan'ability' ..
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New post 23 Feb 2012, 09:42
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Dear devinawilliam83

That's a good point you make. It's absolutely true that they could do a good job or a not-so-good of designing the tax incentive. It's absolutely true that some not-so-good tax incentive schemes "would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings." But consider this.

First of all, that information is given in the form of a slope or a function. It's not that everyone, regardless of increase in retirement savings, gets a single flat deduction on their taxes. That's not what it's saying. No, rather, everyone gets the same tax savings for each particular given increase in retirement savings. If two people, at different income levels, increase their retirements the same amount, their taxes are decreased the same amount. That doesn't mean that you can't reduce your taxes more by putting more in retirement. This restraint completely leaves open the possibility of: if you save more, you pay less in taxes. For extreme simplicity, let's say that the function is just a 1-to-1 ratio --- that it, for every dollar I increase my retirement savings, I can deduct that dollar from my taxes. Middle income John Q Public puts an extra $600 in retirement, and therefore saves $600 in taxes. If Chester Moneybags also puts an extra $600 in retirement, he also saves $600 in taxes, but if he puts an extra $750,000 in retirement, he saves $750,000 in taxes. Of course, he would be a fool not to do the latter if he could. Sizable deductions (percentage-wise) are relatively plentiful for folks with low or middle income, but when you get into upper echelons of the tax brackets, getting huge percentage deductions is much trickier. If anything, this scheme could wildly motivate the very rich to shovel money into retirement funds.

It's also true that, designing the tax incentive one way, a lot of the increase in retirement funds would come from the middle class (that could actually be a ton of money, if every single middle income household kicks in). Designing the tax incentive another way, a lot of the increase in retirement funds would come from the super-rich. I'm no expert on tax law, but it seems to me that you have the equal tax break for equal increase in retirement funds thing and still have the incentive slant either way. The point it: as long as they get the money they need, it doesn't matter one whit to the businesses how they do it.

It's 100% true that the tax-incentive plan could be incredibly poorly designed and not accomplish its goal. It's also quite true that it could be a work of sheer genius that works flawlessly, raises even more revenue than expected, and makes everyone happy. Either of those could be the case, and we don't know. Simply from knowing "The modified tax structure would give all taxpayers, regardless of their incomes, the same tax savings for a given increase in their retirement savings", we have no idea whether it will be a very well designed or very poorly designed tax package.

IN GMAT CR, when you are asked one of these "which most weakens the argument" questions, you can't afford to get into a sea of hypotheticals. "If (E) is true, and then this, and then also that -- then all of that together would hurt the argument" ---- that's not a recipe for success on these question. When you are asked "which most weakens the argument", one of the five really throws a brick through the argument. Here, that's (A): when middle class folks put more in retirement, they borrow more. BAM. Right there, less money for the businesses. No ambiguity, no hypotheticals. If you find an answer choice in which one possible way to interpret it or one possible way to imagine it playing out hurts the argument, that's not it. You want something that needs as little interpretation as possible: just what it says directly hurts the argument.

Does all this make sense? Please let me know if you have any further questions.

Mike :)
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New post 05 Jan 2014, 16:55
sagarsabnis wrote:
Businesses 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.
(8) 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.
(e) 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.

Please some one explain this...as i am not convinced with the explanation from OG



The negated conclusion is: More money is NOT available to the borrowers

Choice A offers the best explanation for this because it says that now there are more borrowers and so more money would actually not be available to the borrowers.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 30 Sep 2015, 09:26
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Hi, there. I'm happy to help with this. :)

The argument:
Businesses 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.

In a nutshell --- if we tweak the tax system to encourage folks to put more into their retirement accounts, then presto, more money for loans will be available to business.

Prompt:
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?

So, which answer effectively says -- make those changes to the tax code, and there won't be as much money for loans available to business?

(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly.
OK, so when people put more into their retirement, they wind up borrowing more. That would mean, private citizens en masse would be competing with business for that loan money --- that would mean less money for loans available to business. A possible right answer.

(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.
Making this change to the tax code could wind up hurting the government --- interesting, but not relevant to the argument. The argument is strictly about: will business have more money available for loans? What happens to the government is irrelevant to this argument. (B) is out.

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.
This argument above is a macroeconomics argument. It's about changes in the entire tax-system, the entire banking system, etc. Of course, not every private citizen will follow the tax incentive. Tax incentives are given with the idea that only a certain percentage of the population will respond to them. So, some private citizens won't respond to the tax incentive. So what? That's 100% predictable, and not relevant to the big macroeconomic argument at hand. (C) is out.

(D) Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules.
Well, anyone -- a household or a business --- that fails to meet loan payments is not going to be wildly successful getting more loans. That's pretty obvious. There's absolutely nothing in the original argument suggesting that the businesses discussed are so strapped for money that they all are defaulting on their loans. The business are "struggling" insofar as they can't take out loans to fund R&D, which would grow already thriving businesses. My business is making money already, and I want to to R&D to grow it, but there's no money for loans so I can pursue that R&D --- that's the problem we are addressing, according to the original argument. The problem of some business defaulting on their loans --- that's something separate, not relevant to this argument. (D) is out.

(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.
Again, this is a macroeconomic argument. What matters it the total revenue taken in by the government. Let's say, because of this tax code change, retirement accounts get an additional $1 billion, and that new money is available for loans to business. That $1 billion could have come from everybody in the whole socioeconomic spectrum making an equal contribution, or it could have come from rich people putting in much much more than middle class people. From the business standpoint, once they have that $1 billion available for loans, they don't give a flying figtree where it came from. From the business point of view, it's completely irrelevant how the government goes about raising that money; the specifics of allocation by various socioeconomic classes doesn't matter at all. (E) is out.

Thus, answer (A) is the only one that poses a direct attack on the argument, so that's the answer.

Does that make sense?

Here's another free CR practice question of a similar type.

http://gmat.magoosh.com/questions/1257

The question at that link should be followed by a free video with a complete explanation of the solution, once you submit you answer.

Let me know if you have any other questions.

@mikemcgarry

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

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Businesses 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.


Type: Weaken
Boil It Down: Tax change -> More deposits -> More $ for DEVELOPMENT loans
Missing Information: The plan will work.
Goal: Our goal is to “raise the most serious doubt regarding the effectiveness of the government's plan”. That means we need to select an option that points to a reality in which the government’s goal of facilitating greater capital available for business development loans won’t be achieved. We need to find an option that shows that despite the government's plan, there wouldn’t be an increase in funds available for business development loans specifically.

Yes. This option exposes the truth that when retirement savings increase, CONSUMER borrowing always increases correspondingly. In other words, this option would radically wipe out the hope that increased retirement deposits will boost funds available for DEVELOPMENT borrowing. The capital is likely to get absorbed by consumers instead. Notice that this argument doesn’t entirely destroy the plan, but it absolutely raises a serious doubt regarding the effectiveness of the government’s plan to boost funds available for DEVELOPMENT loans.

Also notice the nasty shift from CONSUMER borrowing to BUSINESS borrowing. The prompt says: "Businesses are suffering because of a lack of money available for development loans." This argument is bluntly stating that the objective is to promote the lending capacity for businesses. So now, according to A, if that new lending capacity spurred on by a boost in savings among individual taxpayers is getting scooped up by consumers (individuals) instead, is this new lending capacity as likely to make it to businesses? No. That's why A weakens the likelihood that the plan will work. This option turns out to be a stunningly awesome demonstration of the degree of precision and engagement we need when we read.


The health of the federal budget is violently Out of Focus to what this question asks us to do. This plan could result in a dramatic cut in revenue for the government, but the government's goal of boosting loans available for business development could still work.

No impact. Nobody is making the claim that EVERYONE will boost retirement savings as a result of the government’s plan, so whether SOME people don’t increase retirement savings is of no consequence to an evaluation of the government’s plan. This option provides no significant information to show that the government’s plan is not likely to succeed.

Trash this option. We have no way to tell how relevant this option is to the government’s plan. If banks won’t lend to businesses that are unlikely to pay the loans on time, the government’s plan to boost lending to businesses in general could still succeed because, for all we know, a substantial share of businesses could still qualify. We just don’t know to what extent this loan condition impacts the lending environment. For this option to be even remotely in play, the test-taker would have to make the unwarranted leap that a substantial volume of businesses can’t meet the loan payment schedules. We can’t make any such leap.

This option introduces a factor that has no clear impact on the likelihood that the government’s plan will work. This option could just as easily help reaffirm the likelihood that the government’s plan would work if it appears a general increase in retirement funds were available. In that interpretation of E, it actually becomes a 180 option.

Bigger GMAT Perspective:
Why is this question statistically so hard? A brutally sneaky shift in focus from CONSUMER lending to BUSINESS lending. What can be done to be able see the magnitude of option A? The most basic GMAT Verbal tenet of all: extremely engaged and careful reading. That's something that takes more discipline (especially when a timer is running, and the adrenaline is flowing) than most people realize. GMAT assassins train to be able to read at optimal 200 WPM pace. It's staggering how much easier the GMAT feels when it's read at optimal speed, and with the right set of engaged reading actions. Test-takers are able to reduce time wasted re-reading, and trim time evaluating the options.
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Originally posted by EMPOWERgmatVerbal on 28 Dec 2015, 15:03.
Last edited by EMPOWERgmatVerbal on 11 Jan 2016, 14:12, edited 1 time in total.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 11 Jan 2016, 08:16
ykaiim wrote:
Even I marked C but I doubt the OA in OG. The last line of argument says that -

because as more money is deposited in such accounts, more money becomes available to borrowers.


While A says that -
(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly.

This is ambiguous. I think to make this a correct argument, the last line of the passage should have been -
because as more money is deposited in such accounts, more money becomes available to bankers/lenders.


Experts, please comment.



when consumer borrowing increase, more money may not left for business borrowing.
Does this make sense?
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 11 Jan 2016, 14:07
robu wrote:
ykaiim wrote:
Even I marked C but I doubt the OA in OG. The last line of argument says that -

because as more money is deposited in such accounts, more money becomes available to borrowers.


While A says that -
(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly.

This is ambiguous. I think to make this a correct argument, the last line of the passage should have been -
because as more money is deposited in such accounts, more money becomes available to bankers/lenders.


Experts, please comment.


when consumer borrowing increase, more money may not left for business borrowing.
Does this make sense?

Following up on what robu said, the term "consumer" refers to individuals rather businesses. The prompt says: "Businesses are suffering because of a lack of money available for development loans." This argument is bluntly stating that the objective is to promote the lending capacity for businesses.

So now, according to A, if that new lending capacity spurred on by a boost in savings among individual taxpayers is getting scooped up by consumers (individuals) instead, is this new lending capacity as likely to make it to businesses? No. That's why A weakens the likelihood that the plan will work.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 08 Jun 2016, 20:06
While solving a CR question, it is very easy to forget the main point as to why we are solving this particular question.
Therefore it is always good to read the question stem first and then the passage.

Here we need to weaken the conclusion that more money would be available for the business after the modification of tax structure.

Only Option A does that by saying that the individuals will also start borrowing more, hence no money will be left for the businesses.

Option B is irrelevant

Option C: even if some do not increase the savings, some others will. Hence this does not weaken our conclusion

Option D: This would have been the case always. Obviously bankers would put a criteria before lending out. This criteria would not be affected by the modification of tax structure.

Option E: This again does not talk about the availability of the loan for the businesses. Irrelevant

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

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New post 11 Aug 2016, 04:44
A sound very promising to me but Why not D?? Because if bankers will not lend the money then how Businessman will expand their business?
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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New post 11 Aug 2016, 12:50
akashbolster wrote:
A sound very promising to me but Why not D?? Because if bankers will not lend the money then how Businessman will expand their business?

Hi akashbolster,

I'd be happy to help. Our goal is to “raise the most serious doubt regarding the effectiveness of the government's plan”. That means we need to select an option that points to a reality in which the government’s goal of facilitating greater capital available for business development loans won’t be achieved. We need to find an option that shows that despite the government's plan, there wouldn’t be an increase in funds available for business development loans specifically.

Here's D again (for convenience): Bankers generally will not continue to lend money to businesses whose prospective earnings are insufficient to meet their loan repayment schedules.

We have no way to tell how relevant this option is to the government’s plan. If banks won’t lend to businesses that are unlikely to pay the loans on time, the government’s plan to boost lending to businesses in general could still succeed because, for all we know, a substantial share of businesses could still qualify. We just don’t know to what extent this loan condition impacts the lending environment. For this option to be even remotely in play, the test-taker would have to make the unwarranted leap that a substantial volume of businesses can’t meet the loan payment schedules. We can’t make any such leap.
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