GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 19 Sep 2018, 09:54

LIVE NOW:

Missing Clues in Data Sufficiency - Chat With Veritas  |  Kellogg & INSEAD R1 Apps Due TODAY - Join MBA Chat Room to Get Last-Minute Doubts Cleard


Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

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

  post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
Manager
Manager
avatar
Joined: 14 Mar 2008
Posts: 125
Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 28 Mar 2008, 12:18
1
28
00:00
A
B
C
D
E

Difficulty:

  85% (hard)

Question Stats:

52% (01:28) correct 48% (01:52) wrong based on 4547 sessions

HideShow timer Statistics

Edit: This discussion has retired. Find the new thread HERE


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.
Intern
Intern
User avatar
Joined: 22 Feb 2008
Posts: 9
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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?
CEO
CEO
User avatar
Joined: 17 May 2007
Posts: 2880
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
Intern
Intern
avatar
Joined: 05 Jul 2006
Posts: 9
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
Manager
Manager
avatar
Joined: 22 Jul 2009
Posts: 170
Location: Manchester UK
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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
Manager
Manager
avatar
Joined: 22 Jul 2009
Posts: 170
Location: Manchester UK
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 22 Dec 2009, 13:35
Still waiting for some more replies before posting OA
Manager
Manager
User avatar
Joined: 25 Aug 2009
Posts: 137
Location: Streamwood IL
Schools: Kellogg(Evening),Booth (Evening)
WE 1: 5 Years
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
_________________

Rock On

Director
Director
User avatar
Joined: 25 Aug 2007
Posts: 821
WE 1: 3.5 yrs IT
WE 2: 2.5 yrs Retail chain
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.


Experts, please comment.
_________________

Want to improve your CR: http://gmatclub.com/forum/cr-methods-an-approach-to-find-the-best-answers-93146.html
Tricky Quant problems: http://gmatclub.com/forum/50-tricky-questions-92834.html
Important Grammer Fundamentals: http://gmatclub.com/forum/key-fundamentals-of-grammer-our-crucial-learnings-on-sc-93659.html

Director
Director
User avatar
Joined: 25 Aug 2007
Posts: 821
WE 1: 3.5 yrs IT
WE 2: 2.5 yrs Retail chain
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 14 May 2010, 04:48
Also, A is just the prephased of last sentence of the argument.
_________________

Want to improve your CR: http://gmatclub.com/forum/cr-methods-an-approach-to-find-the-best-answers-93146.html
Tricky Quant problems: http://gmatclub.com/forum/50-tricky-questions-92834.html
Important Grammer Fundamentals: http://gmatclub.com/forum/key-fundamentals-of-grammer-our-crucial-learnings-on-sc-93659.html

VP
VP
avatar
Joined: 17 Feb 2010
Posts: 1227
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 14 May 2010, 12:13
22
5
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.
Manager
Manager
avatar
Joined: 16 Feb 2010
Posts: 155
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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
Intern
Intern
avatar
Joined: 10 Aug 2007
Posts: 3
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
Manager
Manager
avatar
Joined: 31 May 2010
Posts: 75
Reviews Badge
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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
_________________

Kudos if any of my post helps you !!!

Verbal Forum Moderator
avatar
Joined: 31 Jan 2010
Posts: 423
WE 1: 4 years Tech
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
_________________

My Post Invites Discussions not answers
Try to give back something to the Forum.I want your explanations, right now !
Please let me know your opinion about the Chandigarh Gmat Centrehttp://gmatclub.com/forum/gmat-experience-at-chandigarh-india-centre-111830.html

Intern
Intern
avatar
Joined: 10 Aug 2007
Posts: 3
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
Director
Director
User avatar
Joined: 21 Dec 2010
Posts: 515
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 28 Apr 2011, 04:09
13
2
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
_________________

What is of supreme importance in war is to attack the enemy's strategy.

Manager
Manager
User avatar
Status: Dream big, work hard, and drink gallons of beer!
Joined: 11 Jun 2011
Posts: 157
Concentration: Finance, General Management
GMAT Date: 10-01-2011
WE: Web Development (Consulting)
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
_________________

If I look absent-minded or insane, I am just living a dream of being successful. If you still wonder why I am like this, you have no idea how success tastes like!

Senior Manager
Senior Manager
avatar
Joined: 24 Mar 2011
Posts: 391
Location: Texas
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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
Manager
Manager
User avatar
Joined: 09 Nov 2011
Posts: 118
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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.
_________________

Time to play the game...

Manager
Manager
avatar
Joined: 13 Aug 2010
Posts: 183
Re: Business are suffering because of a lack of money available for develo  [#permalink]

Show Tags

New post 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

Go to page    1   2   3   4   5    Next  [ 81 posts ] 

Display posts from previous: Sort by

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

  post reply Question banks Downloads My Bookmarks Reviews Important topics  

Moderators: GMATNinja, GMATNinjaTwo

Events & Promotions

PREV
NEXT


GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.