Chief Economist: Usually, the release of economic data about higher-than-expected growth in the Gross
Domestic Product (GDP) results in an increase in stock prices. However, this quarter, the release of data
about strong GDP growth is most likely to result in a decrease rather than an increase in stock prices. Robust GDP
growth will lead to higher interest rates, increasing the attractiveness of bonds and causing a shift
of capital from equity to debt securities. In the above argument, the statements in boldface play which of
the following roles?

• The first acknowledges a consideration against the main conclusion of the chief economist; the second is that
conclusion.
INCORRECT.The second part is not the conclusion, it is a reasoning
• The first is a pattern of cause and effect that the chief economist predicts will not hold in the case at issue; the
second offers a consideration in support of that prediction.
CORRECT. first is a pattern that will not hold in this case. Second is the reason why the first pattern will not hold. The reason is that money will be moved form capital markets to debt structures.
• The first is a generalization that the chief economist accepts as true; the second is a consequence that follows
from that generalization.
First is NOT a generalization. It is an observation
• The first is evidence that the chief economist provides in support of a certain prediction; the second is that
prediction.
Second is not a prediction, but a factual statement
• The first is a pattern of cause and effect that the chief economist predicts will be repeated in the case at issue; the
second acknowledges a circumstance in which that pattern would not hold.
First is a pattern that WILL NOT be repeated. Therefore INCORRECT

Choice B is the correct one. Actually, I confuse btw choice B and choice E. However, the cause and effect in the first bold is not hold/ repeated in the case at issue. Also, the second part, as choice E said, is wrong. The second part support the prediction of the author.
_________________

First sentence is a pattern of cause & effect. Second statement is the reason why it will not be true in this quarter.

B is my answer

This argument made by the Chief Economist consists of -

1) Cause and effect pattern - First boldface (Premise 1)
2) Conclusion - Non-bold faced line
3) Counter-premise ( Premise 2 )

Chief Economist: Usually, the release of economic data about higher-than-expected
growth in the Gross Domestic Product (GDP) results in an increase in stock prices.
However, this quarter, the release of data about strong GDP growth is most likely to result in
a decrease rather than an increase in stock prices. Robust GDP growth will lead to higher
interest rates, increasing the attractiveness of bonds and causing a shift of capital from
equity to debt securities.

In the above argument, the statements in boldface play which ofthe following roles?

A) The first acknowledges a consideration against the main conclusion of the chief economist;
the second is that conclusion. --> The first is against the main conclusion. But the second is not the conclusion.
b) The first is a pattern of cause and effect that the chief economist predicts will not hold in the
case at issue; the second offers a consideration in support of that prediction. -->This seems correct. Cause-and-effect are mentioned in first boldface whereas the same won't probably hold true due to the second boldface
c) The first is a generalization that the chief economist accepts as true; the second is a
consequence that follows from that generalization.-180 degree opposite answer. If this were true, then the economist won't say that equities would be negatively affected by GDP growth data
d) The first is evidence that the chief economist provides in support of a certain prediction; the
second is that prediction.-False, the first is a pattern which usually is observed. The second is a consideration for another prediction, but it is not the prediction itself.
e) The first is a pattern of cause and effect that the chief economist predicts will be repeated in
the case at issue; the second acknowledges a circumstance in which that pattern would not
hold. False. The entire question is built around the idea that the economist predicts that the pattern won't be repeated.

i would also like to go with B ....
Option E presents the opposite of what is reqd..
Second statement is not the conclusion so A is out.
Option D is out coz the first statement is not presented to support any view point.Rather it is presented to give a contrasting view point.
Option C does not presents the correct explanation of the second statement.

Consider kudos if my post helps!!!!!!!!1

Archit

IMO, B is correct.

The very favorite pattern of GMAC in arguments is "X is good, however, Y is better because Z......"

The pattern in this argument is:

[GDP growth usually results in an increase in stock prices], however, [in this case, GDP growth will result in decrease in stock prices]. Because [Robust GDP growth will lead to higher interest rates, increasing the attractiveness of bonds and causing a shift of capital from equity to debt securities.]

Hence, B is correct.

OFFICIAL EXPLANATION

The chief economist begins his argument by describing the usual relationship of cause and effect. Thus, the first statement in boldface represents a generalization that the chief economist accepts as accurate. The economist then goes on to conclude that this time, however, the usual cause-and-effect relationship will not hold and strong figures of the GDP will cause a decrease rather than an increase in stock prices. To support this conclusion, the economist offers evidence explaining how strong GDP figures may lead to lower stock prices. Therefore, the second statement in boldface represents evidence that supports the main conclusion of the economist.


(A) This answer choice correctly describes the role of the first statement but incorrectly states that the second statement in boldface represents the conclusion of the economist rather than the evidence that supports that conclusion. Remember, the conclusion of the economist is that strong GDP figures will result in a decrease rather than an increase in stock prices.

(B) CORRECT. This answer choice correctly identifies the role of each of the two parts in boldface. The first part represents a generalization that is typically accurate but will not be repeated in the case at issue. The second portion presents evidence in support of the economist’s prediction.

(C) This answer choice correctly describes the role of the first portion but mistakenly states that the second part in boldface follows from this generalization. The second statement in boldface presents evidence that supports the opposite effect from that described in the first portion. Namely, the economist claims that this time, stock prices will decrease rather than increase, as would be usual.

(D) This answer choice incorrectly states that the first portion supports rather than weighs against that economist’s prediction. In addition, this answer choice incorrectly states that the second portion in boldface represents the economist's prediction rather than evidence supporting it.

(E) This answer choice incorrectly states that the first statement will be repeated in the case at issue. Remember, the economist argues that the usual pattern will not hold this time. The second statement is correctly described as acknowledging a circumstance in which the usual pattern will not hold.
_________________

Analysis of argument:
1. Chief Economist informs that usually (the standard pattern) the release of economic data about higher-than-expected growth in the Gross Domestic Product (GDP) results in an increase in stock prices.
2. Chief Economist expects (his view) a decrease in stock prices this quarter despite a data with strong GDP growth numbers
3. Chief Economist’s reason for his view: Robust GDP growth will lead to higher
interest rates, increasing the attractiveness of bonds and causing a shift of capital from
equity to debt securities.

Pre thinking:
Chief Economist expects(predicts) stock prices to go down this quarter despite strong GDP growth numbers.
Chief Economist reaches his expectation by assuming that Robust GDP growth will lead to higher interest rates, increasing the attractiveness of bonds and causing a shift of capital from equity to debt securities.
So Chief Economist believes that the usual relationship between stock prices and GDP data will not hold.

Answer choice analysis:
A) The first acknowledges a consideration against the main conclusion of the chief economist;
the second is that conclusion.
Incorrect! Second is not the conclusion but the reason for chief economist to believe what he is predicting.

b) The first is a pattern of cause and effect that the chief economist predicts will not hold in the
case at issue; the second offers a consideration in support of that prediction.
Correct: Chief economist predicting a fall in stock prices against the usual rise with increase GDP and this is what first bold face statement says. The second bold face statement gives the reason which chief economist believes will cause stock prices to fall

c) The first is a generalization that the chief economist accepts as true; the second is a
consequence that follows from that generalization.
Incorrect: First is not generalization but a pattern which usually holds.

d) The first is evidence that the chief economist provides in support of a certain prediction; the
second is that prediction.
Incorrect: First is not a prediction but a pattern which usually holds.

e) The first is a pattern of cause and effect that the chief economist predicts will be repeated in
the case at issue; the second acknowledges a circumstance in which that pattern would not
hold.
Incorrect: Chief economist is predicting the pattern to break.

B. The main point that the economist wants to make is that the causality mentioned in BF1 won't happen this time. The economist is using BF2 in order to support his claim that the causality won't be repeated.

Sent from my ONE A2003 using GMAT Club Forum mobile app

[quote="GetThisDone"]Chief Economist: Usually, the release of economic data about higher-than-expected
growth in the Gross Domestic Product (GDP) results in an increase in stock prices.
However, this quarter, the release of data about strong GDP growth is most likely to result in
a decrease rather than an increase in stock prices. Robust GDP growth will lead to higher
interest rates, increasing the attractiveness of bonds and causing a shift of capital from
equity to debt securities. In the above argument, the statements in boldface play which of
the following roles?
A) The first acknowledges a consideration against the main conclusion of the chief economist;
the second is that conclusion.
b) The first is a pattern of cause and effect that the chief economist predicts will not hold in the
case at issue; the second offers a consideration in support of that prediction.
c) The first is a generalization that the chief economist accepts as true; the second is a
consequence that follows from that generalization.
d) The first is evidence that the chief economist provides in support of a certain prediction; the
second is that prediction.
e) The first is a pattern of cause and effect that the chief economist predicts will be repeated in
the case at issue; the second acknowledges a circumstance in which that pattern would not
hold.

Briefly:
Data about higher-than-expected growth results in an increase of GDP. BACKGROUND KNOWLEDGE THAT WORKS AS AN COUNTERCONCUSION
However,this quarter, data about h-t-expected growth will cause adverse effect. CONCLUSION
This happens because.. PREMISE THAT SUPPORTS THE CONCLUSION

The only optionn that matches the analysis is B

What is meant by pattern of cause and effect in opt 2. I always get lost with this kind of options

Why is B not the correct answer? The second statement is the economist's conclusion in this situation.
Please clarify the same.

Thanks,

ucb2k7

BF1 is what Chief Economist believes is usually true. But he concludes/predicts that it will not be the case this quarter.
CONCLUSION- The release of data about strong GDP growth is most likely to result in a decrease rather than an increase in stock prices.
BF2 is one of the reasons to support his prediction that BF1 will not happen this quarter.

Hey ucb2k7
the second statement is not the conclusion, but rather an explanation of the conclusion. The conclusion is the non-bold sentence before it: However, this quarter, the release of data about strong GDP growth is most likely to result in
a decrease rather than an increase in stock prices. the second statement is simply the reasons that this conclusion is true
_________________

Hey sanaexam

A "pattern of cause and effect" is simply a statement of causation: in other words, a statement of the structure: x causes/caused/will cause y. the first statement fit this description, since it boils down to the statement: x (release of economic data) causes y (an increase in stock prices).
_________________

Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________