During the 1930s, Roosevelts New Deal expanded federal authority by

Question

Which of the following most logically completes the argument?

During the 1930s, Roosevelt’s New Deal expanded federal authority by creating several new government agencies designed to administer financial relief to the country, which had been devastated by the 1929 stock market crash and the ensuing economic depression. In the decades following the depression, however, policymakers grew uncomfortable with the amount of power that had been given to the federal government and sought to discontinue many of the agencies created under the New Deal. Although they feared another economic depression, many prominent economists of that time sided with those policymakers, since

(A) further expansion of federal authority would hinder economic growth and increase the risk of another economic depression.

(B) many agencies created under the New Deal were designed to provide financial relief, not to maintain economic stability.

(C) most Americans feared expansion of federal authority more than they feared another economic depression.

(D) the power and authority of many agencies created under the New Deal had expanded well beyond the limits defined in their respective agency charters.

(E) most policymakers of that time considered federal regulation of the market to be an emergency measure that, as such, should only be temporary.

GMATNinja · Accepted Answer

The conclusion is that "many prominent economists of that time sided with those policymakers", implying that the economists, like the policymakers, "grew uncomfortable with the amount of power that had been given to the federal government and sought to discontinue many of the agencies created under the New Deal." How do we arrive at that conclusion?

The agencies created under the New Deal were designed to administer financial relief to the country DURING an economic depression. 
 AFTER the economic depression ("in the decades following the depression"), economists and policymakers were more concerned with the amount of power those agencies had given to the federal government than with the administration of financial relief... why? 
 If the agencies administering financial relief are useful in  preventing  an economic depression, we wouldn't expect the economists to want to discontinue those agencies. 
 However, if those agencies are only useful in helping to  end  an economic depression and not necessarily in  preventing  a new economic depression, then the economists' desire to discontinue those agencies AFTER the depression makes sense.

(A) According to this statement, FURTHER expansion of federal authority would increase the risk of another economic depression. This answer choice is tempting because we know that the economists feared another recession. But the policymakers and economists wanted to DISCONTINUE many of the New Deal agencies, not just prevent further expansion of federal authority. Choice (A) does not explain why the economists want to REDUCE the level of federal authority, so we can eliminate (A).

(B) We are told that the policymakers and economists wanted to discontinue many of the New Deal agencies AFTER the economic depression, not during the depression. If the agencies administering financial relief are useful in  preventing  an economic depression, we wouldn't expect the economists to want to discontinue those agencies. However, choice (B) tells us that those agencies were designed only to provide financial relief (i.e. DURING an economic depression), not to maintain economic stability (i.e. AFTER an economic depression). This statement explains the economists' point of view, so let's hang on to choice (B).

(C) This statement tells us how "most americans" felt but does not explain the point of view of the economists, so choice (C) can be eliminated.

(D) The power and authority of the government agencies exceeded the limits defined when those agencies were created, but is that necessarily a bad thing? This information only tells us that the power of those agencies expanded but does not explain WHY economists grew uncomfortable with that expansion of power. Furthermore, choice (D) does not explain why the economists would want to get rid of agencies that are seemingly designed to combat economic depressions. We can eliminate choice (D)

(E) This choice explains why the  policymakers  wanted to discontinue the New Deal agencies, but it does not explain why the  economists  wanted to do so. Choice (E) can be eliminated.

Choice (B) is the best answer.

Labmalo · Answer

IMO, the answer is B.

The agencies were created after the depression and their role was to relief the devastated economy, then it worked and the economy recovered. Afterward, since the new economic depression is expected to come, all the people need is to find a measure to keep the Economy stable and not to fall in the same path as it did in 1929; People should not wait till the economy gets devastated again and then give it some financial relief treatments like the agencies did in the past. Hence，the agencies had no added value to be continued and to deal with the coming depression. Therefore B.

I think in this question, we need to find a reason why the prominent Economists were on the side of the Policy makers / what they thought to decide to be on the same side with the policy makers. That's why E doesn't work.

(Edited several time due to my stupid English :oops:

)

)

GMATNinja · Answer

Responding to a PM...

Great question!

There might be some obvious benefits to keeping the agencies open rather than discontinuing them. But remember, we don't necessarily need a statement that PROVES that the agencies should be discontinued. Rather, we need a statement that "MOST LOGICALLY" explains why many prominent economists would have sided with the policymakers.

Choice (B) may not be a bulletproof reason for shutting down the agencies, but it certainly provides a logical explanation and  completes the argument more logically  than any of the other choices (perhaps those economists felt that the agency could easily be reopened if another recession were to occur).

We only need a logical explanation for why  many  (not all) prominent economists would have sided with the policymakers. Maybe the others would have agreed that the agencies should have been kept open in case another recession hits, but that possible scenario does not make choice (B) incorrect.

sunkiss12116 · Answer

i chose D because the passage stated that "policymakers grew  uncomfortable with the amount of power  that had been given to the federal government and sought to discontinue many of the agencies created under the New Deal"

so i would assume that the economists had sided with the policymakers' belief that the agencies had too much power, hence choice D

please correct me if i'm wrong? thx

GMATNinja · Answer

(D) might explain why the economists would want to  reduce  the amount of power given to those agencies, but why would they want to  discontinue  those agencies if they fear economic depression?

We know that the  policymakers  grew uncomfortable with the amount of power that had been given to the federal government, but we cannot assume that the economists felt the same way. All we know about the economists is that they feared economic depression and that, despite that fear, they agreed that the agencies should be discontinued.

Again, (D) could explain why the economists would want to shrink the power and authority of those agencies down to their original amounts, but it does not explain why they would want to get rid of those agencies altogether.

(B) is a better answer.

AnirudhaS · Answer

After reading the solutions, i am still not convinced with the explanation.

From the passage - 
1) policymakers are worried about amount of power
2)therefore they wanted to discontinue them
3)Economists knew recession impending
4) Economists still sided with the policymakers, because...

(A) further expansion of federal authority would hinder economic growth and increase the risk of another economic depression.
  Ok I get this explanation from gmatninja. They do not want further expansion, but can leave them as it is now.

(B) many agencies created under the New Deal were designed to provide financial relief, not to maintain economic stability.
  This doesn't give the economist a reason to side with the policymakers. Economists are already fearing another recession as stated in the passage. Well it would be pretty silly to discontinue these agencies, then recession hits, then establish new agencies again.

(C) most Americans feared expansion of federal authority more than they feared another economic depression.
  I agree with gmatninja here.

(D) the power and authority of many agencies created under the New Deal had expanded well beyond the limits defined in their respective agency charters.
  And therefore, all the more reason that economists were uneasy about this, hence sided with policymakers. Economists know that recession is impending, they are uneasy about it still they sided with the policymakers against these agencies. Why? probably because they were going beyond the limits defined. There is a reason why limits are defined in the first place.

(E) most policymakers of that time considered federal regulation of the market to be an emergency measure that, as such, should only be temporary.
  I agree with gmatninja here.

tkorzhan1995 · Answer

GMATNinja , can you please explain how we can derive from the argument that economists want to prevent another recession to happen in the future?

GMATNinja · Answer

As you suggest, this question requires us to consider the "prominent economists" mentioned in the passage. In the last sentence, we learn these prominent economists " feared another economic depression ." Since they feared another economic depression, we can conclude they wanted to prevent it from happening.

The correct answer should explain why these economists wanted to discontinue the agencies created under Roosevelt's New Deal, despite the fact that they "feared another economic depression."

So here's (B) again:

This tells us that the agencies were NOT meant to maintain economic stability. Since the economists were concerned about economic stability (i.e. they  feared another depression ), this answer choice would explain why they wanted to discontinue the agencies. So (B) is correct.

I hope that helps!

VerbalBot · Answer

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