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Curbing government spending has been demonstrated to raise t

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Curbing government spending has been demonstrated to raise t [#permalink]

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Curbing government spending has been demonstrated to raise the value of a country's currency over time. However, many economists no longer recommend this policy. A currency of lesser value causes a country's exports to be more competitive in the international market, encouraging domestic industries and making the economy more attractive to foreign investment.

The statements above most strongly support which of the following inferences?

(A) Limited government spending can also lead to a reduction in the national deficit.
(B) Curbing government spending can make a country's exports less competitive.
(C) Many economists now recommend higher levels of government spending.
(D) An increase in the value of a currency will result in reduced government spending.
(E) Competitive exports indicate a-weak currency.
[Reveal] Spoiler: OA

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Last edited by bb on 15 Apr 2017, 14:33, edited 1 time in total.
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Re: Curbing government spending has been demonstrated to raise t [#permalink]

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New post 25 Aug 2014, 01:22
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vad3tha wrote:
Curbing government spending has been demonstrated to raise the value of a country's currency over time. However, many economists no longer recommend
this policy. A currency of lesser value causes a country's exports to be more competitive in the international market, encouraging domestic industries and making the economy more attractive to foreign investment. The statements above most strongly support which of the following inferences?

(A) Limited government spending can also lead to a reduction in the national deficit.
(B) Curbing government spending can make a country's exports less competitive.
(C) Many economists now recommend higher levels of government spending.
(D) An increase in the value of a currency will result in reduced government spending.
(E) Competitive exports indicate a-weak currency.


Here is the official answer

Answer choice (A) may be generally plausible, but the given premises do not mention the national deficit. This answer choice does not have to be true as a result of the information given in the argument. Refrain from bringing in any external facts/premises.

Answer choice (C) might also be generally plausible, but (C), too, requires an additional step from the premises. The fact that economists no longer recommend reduced government spending does not necessarily mean that many economists now recommend increased spending. It is possible that they recommend neutral spending levels.

Both answer choices (D) and (E) employ faulty logic. It may be true that reduced government spending will increase a currency's value, but we do not know whether the reverse is true. Increasing a currency's value does not necessarily have to result in reduced government spending. Similarly, though a weak currency will make exports more competitive, competitive exports do not necessarily indicate a weak currency; exports may be competitive on some other grounds (e.g, exceptional quality).

Answer choice (B) is correct, since it follows directly from the premises. According to the argument, curbing government spending can raise a currency's value. A weaker currency makes a country's exports more competitive. A stronger currency, then, would make a country's exports less competitive than they would have been with a weaker currency. Thus, curbing government spending CAN make a country's exports less competitive. Notice that the word can makes this answer choice a very limited claim. This choice does not state that curbing government spending will make a country's exports less competitive. Such an outcome is simply a possibility. Answer choice (B) is the correct answer.
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Re: Curbing government spending has been demonstrated to raise t [#permalink]

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New post 25 Aug 2014, 08:11
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Thank you vad3tha for all the effort. :)

Curbing government spending has been demonstrated to raise the value of a country's currency over time. However, many economists no longer recommend this policy.
A currency of lesser value causes a country's exports to be more competitive in the international market, encouraging domestic industries and making the economy more attractive to foreign investment.

1.Curbing Govt Spending -> raise currency value.
2.economists no longer recommend 1.
2. lesser currency value -> country's export competitive -> the economy more attractive to foreign investment.

The statements above most strongly support which of the following inferences?
(A) Limited government spending can also lead to a reduction in the national deficit.
>> Nothing mentioned reg national deficit.
(B) Curbing government spending can make a country's exports less competitive. Correct.
(C) Many economists now recommend higher levels of government spending.
>> They don't recommend 1 but not mentioned if they recommend HGS.
(D) An increase in the value of a currency will result in reduced government spending.
>> Reverse of wht is mentioned.Cant be proved from arg.
(E) Competitive exports indicate a-weak currency.
>> Not always ;reverse of wht is mentioned in arg.
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Re: Curbing government spending has been demonstrated to raise t [#permalink]

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Re: Curbing government spending has been demonstrated to raise t [#permalink]

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New post 17 Apr 2016, 01:07
If option E said..
Competitive exports could indicate a-weak currency.
would this also be correct?

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Re: Curbing government spending has been demonstrated to raise t [#permalink]

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New post 24 Apr 2016, 04:37
A currency of lesser value necessarily does not imply the currency is weak. "lesser value" is not synonymous to "Weak". Hence "E" is not apt.
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Re: Curbing government spending has been demonstrated to raise t [#permalink]

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New post 12 Aug 2017, 22:32
(A) Limited government spending can also lead to a reduction in the national deficit -- this has not been talked about at all
(B) Curbing government spending can make a country's exports less competitive -- this is an inference that can be drawn from the information provided in the argument, also it is not extreme answer choice hence the correct one
(C) Many economists now recommend higher levels of government spending- economists do not recommend "Curbing Government Spendings" does not mean that they recommend Higher Levels of Government spendings either.. maybe they recommend no changes in the current level of government spendings
(D) An increase in the value of a currency(X) will result in reduced government spending(Y)-- argument states that Y causes X, moreover an inference is something that is not stated explicitly
(E) Competitive exports indicate a-weak currency -- again the argument says "Weak currency makes a country's export to be more competitive" it cannot be assumed that country with "High value of currency" will not have competitive exports at all

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Re: Curbing government spending has been demonstrated to raise t   [#permalink] 12 Aug 2017, 22:32
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