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

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

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28 Mar 2008, 12:18
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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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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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28 Mar 2008, 17:00
2
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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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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29 Mar 2008, 06:24
1
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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29 Mar 2008, 06:35
1
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.

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

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Updated on: 07 Jan 2016, 04:25
12
76
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

Originally posted by sagarsabnis on 22 Dec 2009, 13:00.
Last edited by carcass on 07 Jan 2016, 04:25, edited 1 time in total.
Edited the post
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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22 Dec 2009, 13:35
Still waiting for some more replies before posting OA
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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22 Dec 2009, 14:42
20
4
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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14 May 2010, 04:47
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.

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

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14 May 2010, 04:48
Also, A is just the prephased of last sentence of the argument.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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14 May 2010, 12:13
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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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15 May 2010, 01:36
agreed with seekmba
if people would put more money in retirement saving plan they eventualy end up very less personal saving hence they could become borrowers themselves, and this could frustrate govt's plan, hence the nas must be A
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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14 Dec 2010, 19:57
I don't see why C doesn't weaken the conclusion.

The OG concludes that effectiveness of the plan would be determined not by what "some" people do but by what "most" people do. I would argue that by logic, some means at least one i.e. It can be 1, most or all!

We have to take the choices as true since it is a weaken question i.e. for C, if the people decide not to put money into retirement savings account, then the conclusion is weakened in that the plan to provide more money to borrowers via the retirement savings account will not work.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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14 Dec 2010, 20:43
Plan of government is to increase the money so that it can meet the loan amount required. Therefore, govt thinking to modify the tax structure to get the more money collected .
But, if due to this plan, if money demanded by the business/consumer also increases, then this plan will not work

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

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15 Dec 2010, 02:11
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.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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16 Dec 2010, 14:02
saurabhgoel wrote:
Plan of government is to increase the money so that it can meet the loan amount required. Therefore, govt thinking to modify the tax structure to get the more money collected .
But, if due to this plan, if money demanded by the business/consumer also increases, then this plan will not work

Hence A

I'm not saying that A is wrong. But the explanation still doesn't rule C out.

As per my response above, The plan would fail because people won't put more money than is currently in a retirement savings account in spite of changes to the tax structure.

I think the reason that OG quotes is not good enough to rule out option C.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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28 Apr 2011, 04:09
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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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28 Jul 2011, 21:33
I was contemplating between C and D. Never thought the answer will be A. Any perspectives about D will be highly appreciated.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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28 Jul 2011, 21:41
sgupta0827 wrote:
I was contemplating between C and D. Never thought the answer will be A. Any perspectives about D will be highly appreciated.

Business who are not doing well wont be given loans... i would think this as irrelevant statement. we dont know what percentage of such business are there...

And i think it was same thing with C... when it says 'some'.. again we dont know the #. if some refrain, many still invest
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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23 Nov 2011, 12:15
IMO it is C.

Govt is under assumption that giving tax incentives will drive taxpayers to put more into Savings account which will inturn increase the money for loan construction.

C is the only one option that weakens this assumption.
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Re: Business are suffering because of a lack of money available for develo  [#permalink]

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23 Nov 2011, 22:40
Between C and A, A is better...

C uses 'some', meaning that many of them will deposit... hence supports the conclusion.

A definitely highlights a flaw.

(originally went for C)
Re: Business are suffering because of a lack of money available for develo &nbs [#permalink] 23 Nov 2011, 22:40

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