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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 23 Aug 2016, 22:44
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.


Yes, but in the question stem, it clearly states that: the plan of the government... for development loans.

Hope it helps!
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New post 23 Sep 2016, 06:04
Quote:
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


obviously, the explanation of mike who Magoosh

I was confused by D & E at first

now, my view of D, E is
for D
the stem is required to weaken the government's plan, so D OUT directly because D is bank's plan.

for E
E states that government provide a promise for taxpayers,
because we cannot get any info about the link btw promise and loan, I don't think it will impact on the plan.---OUT


on the other hand,
I don't think there is a conclusion in the stimulus, this case is required weaken the plan, which states in stem

FACT:Businesses are suffering because of a lack of money available for development loans.
PLAN: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,
judgement:because as more money is deposited in such accounts, more money becomes available to borrowers.--this one won't be conclusion, because it begin with "because"

stem:most serious doubt regarding the effectiveness of the government’s plan to increase the amount of money available for development loans for businesses

last, here is a range change, it is borrowers in stimulus, but business in stem
only business is borrowers ?
aha, there is an indication for choice, because consumers are one kind of borrowers.



that's my approach , please point out if I misunderstanding

thanks a lot
have a nice day
>_~
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Re: Business are suffering because of a lack of money available for develo [#permalink]

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New post 20 Oct 2016, 06:30
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.

(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.

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


basically this is the idea of the plan:
change of private income tax -->private sector (people) save more --> more money be available in the bank -> banks will loan more to business

A is only 1 who influence this relationship chain.
if More savings -> more loans in the private sector, then the relationship: "private sector (people) save more --> more money be available in the bank" is weakened, because the extra money created will be consumed by the private sector and not the business sector.

the rest of the answers have no impact on the mentioned chain.
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New post 26 Dec 2016, 02:04
Ok, ok, ok. I originally picked the wrong answer, but I understand why A is correct. If consumer borrowing goes up, less money is available for businesses to borrow, so the government's plan is undermined. Tricky.
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New post 29 Mar 2017, 00:08
Answer A weakens the argument stronger than C.
IMHO: If we omit "some" or substitute it with "most/all" in answer "C" then it would have been stronger weakener than answer "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 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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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 06 Apr 2017, 21:30
GMATNinjaTwo wrote:
Quote:
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 belief 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.


thank you very much ,GMATNINJAtwo, i think i overlapped the increase part in option E , anyway thanks to put your thought here and keep helping :-D
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New post 06 May 2017, 14:05
I got this wrong initially but believe I have a strong understanding of the question. I was debating between A and D with A as an unsure in regards to what it does to the argument.

My prephrasing includes thinking of the assumption whether or not the retirement savings account is in the same pool of money as the loans.

A - makes sense when I reviewed this and my prephrasing helps a bit about me thinking about pool of money
B - irrelevant. I don't care whether or not the government makes or loses money. Just whether or not the business gets the money
C- SOME people is the key word here. Focusing on modifiers has helped me through other Cr problems. I want a more generalized statement. If some = 2 or 3 people who do not choose to increase the savings, the other 1M people out there still can.
D - I picked this answer specifically thinking that the whole argument falls apart if the banks won't give $ to the businesses since they're sucking right now. And I thought that this would apply to ALL businesses (the current condition) making the entire argument moot. But I realized the word PROSPECTIVE which made my reasoning irrelevant.
E - irrelevant; great that everyone gets the same tax savings, but I still can't justify whether or not that pool i spoke of increases or not.
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Re: Business are suffering because of a lack of money available for develo [#permalink]

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New post 17 Jul 2017, 20:01
strange, using the GMAT-test simulation from OG, I cannot study well.
I think all options seem to be the answer at first; however, if test takers look at each option closely, only A is not out-of-scope.

B discusses about tax revenue => OFS
E talks about how the tax structure of the plan works => OFS
C is out because of "some"
D seems to be an assumption, and D talks about lending money => OFS
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Re: Business are suffering because of a lack of money available for develo [#permalink]

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New post 17 Jul 2017, 23:33
I think the question is easy but the use of convoluted language makes it tricky to answer .
Imo A
If consumer spending is high then the business will have adequate capital to borrow from banks.
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New post 28 Jul 2017, 09:25
Merged topics. Please, search before posting questions!
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New post 31 Jul 2017, 03:23
what is the problem with option E.AS IT SAYS,THE MODIFIED TAX STRUCTURE WOULD GIVE ALL TAXPAYER,REGARDLESS OF THEIR INCOMES,THE SAME TAX SAVING FOR A GIVEN INCREASE IN THEIR RETIREMENT SAVINGS

DOES HERE "GIVEN INCREASE" MEANS SAME INCREASE IN SAVING?
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Re: Business are suffering because of a lack of money available for develo [#permalink]

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New post 31 Jul 2017, 18:29
JAIN09 wrote:
what is the problem with option E.AS IT SAYS,THE MODIFIED TAX STRUCTURE WOULD GIVE ALL TAXPAYER,REGARDLESS OF THEIR INCOMES,THE SAME TAX SAVING FOR A GIVEN INCREASE IN THEIR RETIREMENT SAVINGS

DOES HERE "GIVEN INCREASE" MEANS SAME INCREASE IN SAVING?


See if this post (earlier in the thread) helps: https://gmatclub.com/forum/businesses-a ... l#p1833381
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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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Re: Business are suffering because of a lack of money available for develo [#permalink]

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New post 17 Sep 2017, 10:42
Zatarra wrote:
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

What abt E ?
If the taxes that people save after increasing their retirement savings does not differ from what it would have been had they not increased their retirement saving, then people would not have incentive to save.


@zattara even I have the same doubt regarding option E....can you explain?
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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 Nov 2017, 03:19
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 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.


Between A and E, A is a stronger answer choice because it presents a reason that would defeat the purpose of the plan- increased consumer borrowing would absorb or reduce the amount of money available for business to borrow loans from. E simply provides a reason that may discourage taxpayers from investing into retirement.
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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 Nov 2017, 07:16
sguptashared wrote:
I was contemplating between C and D. Never thought the answer will be A. Any perspectives about D will be highly appreciated.



option D says that banks will not lend moey to certain businesses.but it does not affect the government's plan that increased money in account will lead to increased fund for 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 05 Feb 2018, 21:35
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.


Initially i marked C as the correct answer but it is not. Here is the reason why:

Situation: Currently money in not available for development loans so the businesses are suffering. To increase the money available that needs to be given to business, government is trying to modify the tax structure which would help the consumer to save more on retirement savings.

Choices:

(A) When levels of personal retirement savings increase, consumer borrowing always increases correspondingly. - This is the correct answer as negating it would support the more money at disposal. We needs answer that weakens it.

(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. - Out of Scope

(C) Even with tax incentives, some people will choose not to increase their levels of retirement savings.- Some people will not increase how there are many people who would increase and still support more more money at disposal.

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

(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 not help why still taxpayers would not invest in 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 06 Feb 2018, 11:44
the government plan wants to use the retirement funds as the available money for consumers to borrow.
Nevertheless, if the government does so, more borrowers come and there is still shortage of available money. -> the problem persists.
Re: Business are suffering because of a lack of money available for develo   [#permalink] 06 Feb 2018, 11:44

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