gmatter0913 wrote:
During the recent economic downturn, banks contributed to the decline by loaning less money. Prior to the downturn, regulatory standards for making bank loans were tightened. Clearly, therefore, banks will lend more money if those standards are relaxed.
The argument assumes that...
A. The downturn did not cause a significant decrease in the total amount of money on deposit with banks, which is the source of funds for banks to lend.
B. The imposition of the tighter regulatory standards was not a cause of the economic downturn.
C. The reason for tightening the regulatory standards was not arbitrary.
D. No economic downturn is accompanied by a significant decrease in the amount of money loaned out by banks to individual borrowers and to businesses.
E. No relaxation of standards for bank loans would compensate for the effects of the downturn
Hi folks
This is a LSAT critical reasoning question, which is about “
defender assumption”.
ANALYZE THE STIMULUS:The form of this question is:Fact: Before downturn, standards for making bank loans were tighten, --> loaning less money during the downturn.
Conclusion: if those standards are relaxed, banks will lend more money
Two important things:(1) The
main reason that makes banks lend less money is “
TIGHTEN REGULATIONS”,
NOT “economic downturn”.
(2) The author assumes there is only one factor that make banks lend less money. That is regulatory standards. That also means there is NO OTHER reasons make banks loan less money. This is the core idea of defender assumption, which is introduced in
The PowerScore – Critical Reasoning Bible.
ANALYZE EACH ANSWER:A. The downturn did not cause a significant decrease in the total amount of money on deposit with banks, which is the source of funds for banks to lend.
Correct. This is exactly a defender assumption. A says that the downturn did NOT cause a decrease in the total amount of deposit available for lending <== That could be “other reason” makes banks loan less money. A defends the conclusion by eliminating this probability. Thus, A is correct.
B. The imposition of the tighter regulatory standards was not a cause of the economic downturn.
Wrong. .
VERY TEMPTING. KEY is tighter regulations ==> Loan less money. Keep in mind,
economic downturn is NOT a cause of “loan less money”. If you choose B, the logic will be:
tighten regulations --> downturn --> bank lend less money. If tighten regulations --> NOT lead to downturn --> banks will NOT lend less money. Thus, you automatically insist that only tighten regulations that lead to downturn make banks lend less money. But we're talking "tighten regulations" in GENERAL.
For example, in other periods (does not matter downturn or not downturn), in which regulations are tighten, banks face a lot rules, thus they cannot lend more money. Hence, B is not the assumption of the conclusion “less regulations, banks lend more money”.
C. The reason for tightening the regulatory standards was not arbitrary.
Wrong. Out of scope. We just talk about the relationship between “tighter regulations” and “loan less money”. Arbitrary or non-arbitrary do not help to buttress the conclusion: less tighten regulations, bank can lend more money. If you’re not sure, let negate C:
The reason for tightening the regulatory standards WAS arbitrary. Does it help to support the conclusion above? Not at all.
D. No economic downturn is accompanied by a significant decrease in the amount of money loaned out by banks to individual borrowers and to businesses.
Wrong. TEMPTING because of the wording. However, it’s wrong. Keep in mind, economic downturn is NOT a cause of “loan less money”. If you vote for D, you automatically insist that “economic downturn” is the main reason to make banks lend less money. But, the main reason is “tighten regulations”. It doesn’t matter which period economic downturn or not downturn. (see example in B).
E. No relaxation of standards for bank loans would compensate for the effects of the downturn
Wrong. Same as D. If you vote for E, you automatically insist that regualtions affect “economic downturn”, which would be the main reason to make banks lend less money. But, the main reason to make banks lend less money is “tighten regulations”. It doesn’t matter which period economic downturn or not downturn. (see example in B).
Hope it helps.
PS: OA is A. Please see link below:
https://www.lawschooldiscussion.org/inde ... ic=99361.0