Economist: In Nation X, the number of unsold homes on the market

Question

﻿Economist: In Nation X, the number of unsold homes on the market recently reached a twenty-year high. The last time the number of unsold homes was that high, a severe economic recession soon followed. Therefore, the nation's economy is almost certainly about to suffer another severe recession.

The economist's reasoning is most vulnerable to criticism on which of the following grounds?

A. It confuses a claim about the number of unsold homes on the market with a more general claim about an overall economic recession.

B. It overlooks the possibility that even if one phenomenon causally contributes to another, the latter sometimes, but not always, causally contributes to the former.

C. It overlooks the possibility that other severe economic recessions in Nation X may have occurred when there were not an unusually large number of unsold homes on the market.

D. It fails to address adequately the possibility that one phenomenon may closely follow another by coincidence.

E. It fails to address adequately the possibility that a severe economic recession may itself cause more homes to remain on the market unsold.

MartyMurray · Accepted Answer

The economist concludes the following:

The nation's economy is almost certainly about to suffer another severe recession.

The conclusion is supported by the following premises:

In Nation X, the number of unsold homes on the market recently reached a twenty-year high.

The last time the number of unsold homes was that high, a severe economic recession soon followed.

We see that the economist has reasoned that, since in the past one event, "severe recession," followed another, "unsold homes ... reached a twenty-year high," a severe recession will "almost certainly" soon occur because the number of unsold homes has reached the same high. In other words, the economist has observed a pattern and expects the pattern to repeat.

Since the question asks us to find the choice that present grounds on which "the economist's reasoning is most vulnerable to criticism," the correct answer must point out a flaw in the argument.

A. It confuses a claim about the number of unsold homes on the market with a more general claim about an overall economic recession.

The argument doesn't do what this choice describes. Rather the economist keeps the two claims separate and concludes that the claim about unsold homes supports the claim about a recession.

Eliminate.

B. It overlooks the possibility that even if one phenomenon causally contributes to another, the latter sometimes, but not always, causally contributes to the former.

The argument does not mention this possibility, but even though the argument doesn't mention it, the argument still works.

After all, even if it is the case that a severe recession can cause there to be an unusually large number of unsold homes, it could still be the case that the fact that there are an unusually large number of unsold homes indicates that a recession is about to occur.

Eliminate.

C. It overlooks the possibility that other severe economic recessions in Nation X may have occurred when there were not an unusually large number of unsold homes on the market.

It's true that the economist does not mention the possibility presented by this choice. At the same time, that the economist does not mention that possibility is not a flaw in the argument. Here's why.

The economist's reasoning is basically that "an unusually large number of unsold homes on the market" will be followed by a "severe recession."

So, unsold homes --> recession.

Now, notice that unsold homes --> recession could be true even if severe economic recessions have occurred when there were not an unusually large number of unsold homes on the market.

After all, it could be that recessions occur in a variety of ways; it could be that some recessions follow an unusually large number of unsold homes on the market while other recessions follow a fall in the stock market or an increase in interest rates.

In that case, it would be true that severe economic recessions have occurred when there were not an unusually large number of unsold homes on the market, and at the same time, it could still be true that the current unusually large number of unsold homes on the market will be followed by a severe recession.

In other words, the economist doesn't say that an unusually large number of unsold homes on the market is necessary for a recession to occur. Rather, the economist's point is that an unusually large number of unsold homes on the market is simply a sign that a recession will occur.

So, the argument still works even if other severe economic recessions in Nation X have occurred when there were not an unusually large number of unsold homes on the market.

Eliminate.

D. It fails to address adequately the possibility that one phenomenon may closely follow another by coincidence.

We see that the economist's conclusion that "the nation's economy is almost certainly about to suffer another severe recession" is based solely on the fact that, previously, when there were an unusually large number of unsold homes on the market, there was a recession.

In supporting the conclusion in that way, the economist is assuming that there is a relationship, such as a causal one, between there being an unusually large number of unsold homes on the market and a recession. In doing so, the economist has failed to address the possibility that the past sequence of events, unsold homes then recession, occurred only by coincidence and that, in that case, the fact that there are an unusually large number of unsold homes currently would not support the conclusion that there will be a recession.

So, the argument is flawed because it fails to address that possibility.

Keep.

E. It fails to address adequately the possibility that a severe economic recession may itself cause more homes to remain on the market unsold.

This choice may seem correct because we may get the impression that the argument fails to address the possibility that the causation is reversed and that a recession causes homes to remain on the market rather than that homes remaining unsold leads to a recession.

So, why isn't this choice correct?

The reason is that the scenario doesn't involve an unusually large number of unsold homes on the market and a recession occurring AT THE SAME TIME. Rather, the scenario involves an unusually large number of unsold homes on the market existing BEFORE a recession occurs.

So, since the large number of unsold homes exists before the recession occurs, we know that the recession did not cause the large number of unsold homes. After all, a recession would not cause something that happened before the recession.

So, while the argument does not address the possibility that a severe economic recession may cause homes to remain on the market unsold, that it does not address it is not a flaw.

Eliminate.

The correct answer is  D

MartyMurray · Answer

Hi Vishal.

Actually, the author does not say that there is a cause-effect relationship between unsold houses and a recession. Rather, the author has just pointed out a pattern and has not presented a conclusion regarding the nature of that pattern. It could be a cause-effect relationship, but it could also be that a large number of unsold houses is associated with a future recession in a different way, perhaps simply as an indicator of economic issues that will lead to a recession.

The fact that an effect occurs without the cause mentioned in an argument can be a weakener but is not always a weakener. Whether it's a weakener depends on the nature of the specific argument.

In this case, for argument's sake, let's assume that the author's underlying idea is that a large number of unsold homes will cause a recession. That idea can be valid even if recessions occur without large numbers of unsold homes. After all, the author is not saying that a large number of unsold homes is the only cause of a recession. The author is saying just that it will cause a recession.

If you're still not clear regarding why the possibility that other causes exist doesn't matter in this case, consider the following simple argument:

Sue has found a way to prevent all illness. So, Sue will likely have a lot of money soon.

The author of that argument is suggesting that finding a way to prevent all illness will cause Sue to have a lot of money.

Now, if we say that people have a lot of money without finding a way to prevent all illness, will that fact weaken the argument? No, because the point of the argument is not that finding a way to prevent all illness is the only cause of having money. The argument is going in a different direction, one such that, even if the effect, having a lot of money, exists without the cause, finding a way to prevent all illness, the argument still works.

The argument in this question goes in a similar direction, its point being simply that, when one thing occurs, the other follows rather than that one thing is the only cause of the other.

The takeaway is that, in general, in CR, we have to be careful not to take what we have learned, such as that a choice that presents an alternative cause can weaken an argument, and apply it simply because we see that a context has a resemblance to other contexts in which that concept applies. We must instead thoroughly analyze each CR question and let the pattern we have learned about simply be something we understand in advance so that we save time in our analysis of situations in which it does apply rather than use our knowledge of that pattern as something along the lines of a substitute for analysis of a specific situation.

Paras96 · Answer

The economist's reasoning suggests a correlation between the number of unsold homes reaching a twenty-year high and a severe economic recession. They conclude that the nation's economy is almost certainly about to suffer another severe recession. Let's evaluate the answer choices to find the most appropriate criticism:

A. It confuses a claim about the number of unsold homes on the market with a more general claim about an overall economic recession.
 - The economist is indeed making a connection between the number of unsold homes and an economic recession, rather than a general claim about economic recession. This option doesn't accurately criticize the reasoning.

B. It overlooks the possibility that even if one phenomenon causally contributes to another, the latter sometimes, but not always, causally contributes to the former.
 - This option suggests the possibility that the relationship between unsold homes and economic recession might not be one-directional. While it's relevant, it doesn't specifically criticize the reasoning.

C. It overlooks the possibility that other severe economic recessions in Nation X may have occurred when there were not an unusually large number of unsold homes on the market.
 - This option points out a potential flaw in the reasoning, suggesting that there may have been severe recessions without an unusually large number of unsold homes. It's a valid criticism of the reasoning.

D. It fails to address adequately the possibility that one phenomenon may closely follow another by coincidence.
 - This option raises the possibility of coincidence, but the reasoning in the argument is not based solely on temporal closeness; it's linking the phenomenon to a specific outcome.

E. It fails to address adequately the possibility that a severe economic recession may itself cause more homes to remain on the market unsold.
 - This is a relevant criticism. The economist's argument assumes a one-way causal relationship without considering that the economic recession might be causing more homes to remain unsold.

Both options C and E point out flaws in the economist's reasoning, but option E more directly addresses the issue of causation and the possible reverse relationship between recession and unsold homes. Therefore, the most appropriate criticism is:

E. It fails to address adequately the possibility that a severe economic recession may itself cause more homes to remain on the market unsold.

horrorslive · Answer

could someone explain why E is not the correct choice?

Oppenheimer1945 · Answer

Not clear why you rejected C .

GMATNinja  can you give reasoning to reject C, Is it because of "other severe economic recessions" ?

MartyMurray · Answer

I just added to the explanation for choice (E). If you need more information to fully understand why (E) isn't correct, just let me know.

MartyMurray · Answer

I've added to the explanation for choice (C). If you need more information to understand why it doesn't work, just let me know.

vishalsinghvs08 · Answer

Hi Marty - thank you for the detailed analysis on the question. 
While I understand the logic behind eliminating other options, I am having a hard time wrapping my head around Option C. Author wants us to beleive in a cause effect relationship mentioned below.
 
Cause (unsold houses) - > Effect (recession)
Now, this option is basically telling us, as far I can undestand, that effect( recession) exists even without a cause(unsold houses).

A effect without without a cause to me seems like a valid identifier for a weakener. Please correct me if I am wrong here. Thank you

nikkimah · Answer

Can E option choice and C option choice be eliminated because even if recession causes the unsold homes and unsold homes have occurred before then we can predict the recession to occur next. So, this is not really about cause and effect that much but more about whether recession will happen next or not. 
Option choice D is correct because it says that we ignore the possibility that recession happened as a mere coincidence so we cannot be sure that if unsold homes happen again, recession will definitely occur. 
Is my reasoning correct here
 GMATNinja  @Karisham @E-GMAT  marty

DmitryFarber · Answer

nikkimah

You've got it. C is trying to address other possible causes, but the author isn't trying to claim that there is only one specific cause of recessions. As you've said, they're not really trying to prove causation at all--they're just making a prediction. As for E, it's not clear that if this were the case, we'd  already be  in a recession. But in any case, if it turns out that there's a feedback loop, with a potential cause or marker of the recession getting further exacerbated by the recession itself, that would in no way weaken the author's point.

johnm2 · Answer

Totally agree. D is garbage-- E is more direct and sound in every way.

scab · Answer

I'M still having slight difficulty understanding why E is not the right answer. It does sound to weaken the argument by pointing out that unsold homes > recession may not always be true by stating that recession > unsold homes.

DmitryFarber · Answer

This kind of answer makes sense when we don't already know the order of events. For instance, if harp players are rich, did playing the harp make them rich, or were they rich before they started playing the harp?

However, in this case, we already know the order. The author says that a peak in unsold homes was  followed  by a recession. So clearly in that case, the recession did not cause the homes to remain unsold, since the recession hadn't happened yet. Therefore, if E were true, it would be a separate fact (maybe recessions can also cause unsold homes), leading to the feedback effect I mentioned in my previous post. But it wouldn't affect the causal reasoning of the original argument.

Komal324 · Answer

Hello  DmitryFarber

Hope you're doing well. I solved this question using the cause-and-effect flaw and happened to get the right answer (D). But after going through the conversations in the forum, I realized there's no real cause-and-effect between unsold homes and a recession. So I tried to understand the difference between a pattern and a proof. 
 
In my head, a past event felt like proof, so I saw it as cause-and-effect. But I now see that we call it a  pattern  because it's a  less detailed explanation . In contrast, cause-and-effect provides a  clear mechanism  — for example:  “Higher mortgage rates → fewer buyers → more unsold homes” explains  how and why .

A pattern like “Ice cream sales ↑ → Drownings ↑” shows a link but doesn’t explain the reason. 
 Is my understanding correct? Can I always use this to tell if an argument is showing cause-and-effect or just a pattern?

Thank you for your support and guidance.

Best Regards, 
 Komal

DmitryFarber · Answer

Yes! This is commonly referred to as the difference between correlation and causation. When we see that two things tend to occur together (either all the time or just more often than we'd expect from chance), there's a temptation to assume that one is causing the other. But we don't always know there's a causal link. And even when there is, it might be one of several types. For instance, what if you learn that people who love jazz are, on average, wealthier than those who don't? (J, W are correlated) Is there a causal link? Maybe it's J-->W (loving jazz makes you wealthy--tell that to all the struggling jazz musicians). Or maybe it's W-->J (wealthiness leads you to love jazz, perhaps because you have more $$ for concerts, etc.). Or maybe a third factor is involved: X --> W & J. In that case, something else is leading to both outcomes. For instance, maybe more educated people learn to love jazz, but they also earn more money. So that's three distinct possibilities, and that's assuming there's a causal link at all. Usually, with big statistical correlations there is some explanation. But with one-off occurrences, maybe not. If you read this post and then win the lottery, did one cause the other? In that case, it was probably just a coincidence. But if you win and want to tip me 5%, I won't be mad about it.

Komal324 · Answer

Thank you so much,  DmitryFarber , for the detailed response. I am clear in my head now about this question and conept of correlation and causation in general. Also, I hope I somehow win a lottery soon, hehe!

Best,
Komal

PeachSnapple1 · Answer

C is beautifully written as a trap. I think C would be correct if it twitched a word a little, like this  MAY NOT HAVE FOLLOWED EVEN  when there were an unusually large number of unsold homes on the market.]

egmat · Answer

This is a classic Critical Reasoning flaw question that tests your ability to spot weak pattern-based reasoning. The economist is making a critical error that appears frequently on the GMAT - let me walk you through how to identify it systematically.

Step 1: Identify the Argument Structure

The economist presents:

Current fact: Unsold homes at 20-year high
Historical precedent: Last time this happened → recession followed
Conclusion: Recession is "almost certainly" coming

Step 2: Spot the Core Flaw

Notice the strength of the conclusion ("almost certainly") versus the evidence (ONE historical instance). The economist is treating a single past correlation as proof of a reliable pattern.

Step 3: Evaluate Answer Choices

Let's eliminate the trap answers first:
 Option A  - Claims the economist confuses unsold homes with recession itself. But the economist clearly treats them as separate phenomena (one predicting the other).
 Option B  - Discusses bidirectional causation (recession causing unsold homes). The economist never claims anything about the reverse relationship.
 Option C  - Points out other recessions might occur without high unsold homes. This doesn't address why THIS pattern is unreliable.

Why option (D) is correct:

This correctly identifies the central flaw. The economist sees that high unsold homes were followed by recession once before and concludes this pattern will definitely repeat. The argument fails to consider that this single historical correlation might have been coincidental rather than causal. Just because two events occurred in sequence once doesn’t mean one caused the other or that the pattern is reliable for future predictions.

The  complete solution  reveals the framework for spotting this flaw type across all GMAT pattern-based arguments - including how to quickly eliminate reverse causation traps (like choice E) and identify when "coincidence" is the core vulnerability.

Economist: In Nation X, the number of unsold homes on the market

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GMAT Critical Reasoning (CR) Questions

Economist: In Nation X, the number of unsold homes on the market

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615 to 715 in 15 Days (Ria's Strategies)

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