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

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Senior Manager
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Concentration: Finance, International 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 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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Re: Business are suffering because of a lack of money available for develo [#permalink]

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

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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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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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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] 17 Sep 2017, 10:42

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