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# Economies in which a high percentage of resources are

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Economies in which a high percentage of resources are [#permalink]

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26 Oct 2004, 19:22
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Economies in which a high percentage of resources are invested in research and development show greater growth in the long run than do those in which resources are channeled into consumption. Japanese workers spend a higher percentage of their income investing in research and development than do American workers.

To grow as fast as Japan has in the past three decades, the United States must change the tax code in order to encourage savings and investment and discourage debt.

Which of the following, if true, tends to weaken the argument?

(A) Japanese research is more focused on consumers than is research by American firms.
(B) Class mobility, highly valued in American culture, is encouraged by a growing rather than a stagnant economy.
(C) Studies have shown that countries with high consumption rates prosper in the short run.
(D) Proposed changes to the tax code could involve strict limits on the deductability of interest, and increased allowance for research.
(E) Because a decreasing percentage of the United States is under 40, an age when savings are traditionally low, the savings rate will increase without changes to the tax code.

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SVP
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26 Oct 2004, 19:54
I would go with (D) though (E) also comes close.

Whereas if (D) were true then there will be limits placed on amount spend on research. This will hamper growth in the long run and thus weakens the argument.

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26 Oct 2004, 22:46
My choice - D. If D is true then the tax code doesn't look like a good idea.
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Aspire

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27 Oct 2004, 05:09
anandnk wrote:
I would go with (D) though (E) also comes close.

Whereas if (D) were true then there will be limits placed on amount spend on research. This will hamper growth in the long run and thus weakens the argument.

I am thinking that D strengthens the argument rather than weakens it. If D is true then it is good to change the tax code.

Among the choices given E is the one that seem to weekend the arguement.

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29 Oct 2004, 08:03
(E) stops short of saying Increased Savings result in Increased Investment in research and development, which is necessary for long term growth.

That is why I did not choose (E)

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29 Oct 2004, 08:28
I would go with E as well, D seems to say that tax code would increase the allowances for reasearch thus supporting the argument.

E says that investments in research will increase without a change in tax codes thus weakening the argument that to grow as fast as Japan the U.S. must change tax codes

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29 Oct 2004, 08:42
I would choose "C" on this.

Consider the first sentence of the stem :

" Economies in which a high percentage of resources are invested in research and development show greater growth in the long run than do those in which resources are channeled into consumption "

the conclusion says:

"To grow as fast as Japan has in the past three decades, the USA needs to change tax code..."

Here, the main point is to grow as fast as and not in long run so only "C" says USA need not to change anything because "countries with high consumption rates prosper in the short run anyway.

It would be interesting to know OA

Dharmin
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31 Oct 2004, 09:39
OA is E. Thank you all.

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31 Oct 2004, 17:42
Sorry for being late. Got E as well.

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31 Oct 2004, 17:42
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