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Economies in which a high percentage of resources are [#permalink]
28 Oct 2005, 14:44
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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.
On the basis that investing in reasearch and developement leads to a greater growth in the long run, the author argues that it is necessary (must) change the tax code to grow as fast as Japan has done. Here the clue word is must. It introduces the necessity meaning. In order to weaken the argument one have to find some evidence proving that it is not necessary to change the taxt code in order to grow as fast as Japan has done. This evidence is introduced in E.
Last edited by automan on 29 Oct 2005, 05:48, edited 1 time in total.
The article says that America MUST change the tax code in order to increase savings. However, according to (E), the tax code need not be changed since the savings will increase even without the change of tax code.
a) Out of scope
b) Out of scope
c) Out of scope
d) strengthens the argument
e) The correct option. Because the percentatage of the population that is 40 and below is decreasing, implies that the older generation is growing in percentage of the total population. Since the older generation tends to save more money (unfortunately, we have to assume the savings are channeled into funding for R&D), a change in tax code in unneccessary.