Economist: Some critics of the media have contended

Question

Economist: Some critics of the media have contended that negative news reports on the state of the economy can actually harm the economy because such reports damage people’s confidence in it, and this lack of confidence in turn adversely affects people’s willingness to spend money. But studies show that spending trends correlate very closely with people’s confidence in their own immediate economic situations. Thus these media critics are mistaken.

The economist’s argument is flawed in that it fails to consider the possibility that

The economist’s argument is flawed in that it fails to consider the possibility that

(A) one’s level of confidence in one’s own economic situation affects how one perceives reports about the overall state of the economy
(B) news reports about the state of the economy are not always accurate
(C) people who pay no attention to economic reports in the media always judge accurately whether their own economic situation is likely to deteriorate or improve
(D) people who have little confidence in the overall economy generally take a pessimistic view concerning their own immediate economic situations
(E) an economic slowdown usually has a greater impact on the economic situations of individuals if it takes people by surprise than if people are forewarned

MikeScarn · Accepted Answer

The economist's argument is that the media critics are wrong. The media critics say that negative news on the economy can lead to damaging people's confidence in the economy. And that the lack of confidence in the economy leads to people not fueling the economy. So where is the flaw in the economist's argument? Could negative news actually lead to damaging the economy? (A) one’s level of confidence in one’s own economic situation affects how one perceives reports about the overall state of the economy General statement. This does not imply that the Economist is wrong and the Media Critic's are correct... At least without making some major assumptions. P.S. - I chose this one

(B) news reports about the state of the economy are not always accurate Completely irrelevant. We are not concerned with the accuracy of the news. We are concerned with the behavior of people responding to negative economical news. (C) people who pay no attention to economic reports in the media always judge accurately whether their own economic situation is likely to deteriorate or improve Irrelevant. We are concerned with people who do pay attention to economic reports, specifically negative economic reports. (D) people who have little confidence in the overall economy generally take a pessimistic view concerning their own immediate economic situations People who lack confidence in the economy have a lack of confidence in their immediate economic situations. So negative news could impact their "little" confidence in the economy, which could lead to these people not fueling the economy. This is in line with the Media Critic's argument and it does not align with the Economist's argument. (E) an economic slowdown usually has a greater impact on the economic situations of individuals if it takes people by surprise than if people are forewarned This is actually the opposite of the Media Critics' argument. So we can eliminate. This implies that if there is negative news going into a slowdown, that there will not be as much of a negative impact on the economy as there would be if there was not negative news. So basically, negative news helps the economy not tumble in a downturn.

RaquelR1409 · Answer

Why the correct answer is D and not E?

Posted from my mobile device

AkshdeepS · Answer

Negative news about country's economy does not necessarily mean an ECONOMIC slowdown. Passage does not say anything about economic slowdown.

It talks about negative news that may come out because of several different reasons such as Corruption, Bad policies, Trade deficit, Low GDP etc .

udaypratapsingh99 · Answer

(E) an economic slowdown usually has a greater impact on the economic situations of individuals if it takes people by surprise than if people are forewarned   
According to it, if it media tells true negative news, than it will have overall positive impact on economy(( importantly, non negative impact )) . And same thing is economist is saying, that impact will be non negative. And we need to find flw in it ie. we need to find how the impact will be negative.
so this option is wrong.

(D) people who have little confidence in the overall economy generally take a pessimistic view concerning their own immediate economic situations  
as a result of negative news, people will loose confidence, and thus, according to this option, they'll take a pessimistic view concerning their own immediate economic situations, which according to argument have negative impact.

Let me know if the answer was helpful.

RohitSaluja · Answer

Hi  VeritasKarishma   GMATNinja , I fail to understand why D is the correct answer, below is my analysis of the argument. Please let me know what am I missing here.

Media critics contend that negative news report influences people confidence -> leading to low spending by consumer -> Slow Economy 
 Economist says spending trends correlate very closely with people’s confidence in their own immediate economic situations -> Not affected by negative reports

We need to find a flaw in Economist's argument, now option D as per me supports Economist's argument, here is how

If people who have little confidence generally take a pessimistic view of their situation, then how do we know that they are impacted by negative news, it could be the case that their opinion does not change at all. I mean they already think things are bad, so doesn't it imply that negative news does not have any impact on these folks? and thus this option instead supports Economist's argument, that spending is correlated with people's confidence?

KarishmaB · Answer

Critics: 
Negative news on economy damages people’s confidence in the economy, 
This lack of confidence affects people’s willingness to spend money. 
So Negative news can actually harm the economy.

But studies show that spending trends correlate very closely with people’s confidence in their own immediate economic situations.

Conclusion: Critics are mistaken.

The critics say that bad news on economy can make people spend less money. So it hurts the economy. The author says that spending relates to own economic situation. So critics are mistaken. 
What is the flaw in the author's reasoning?

What if bad news on economy leads to people believing that their own economic situation is bad too? If that happens then the critics could still be right. Bad news on economy would lead to people losing confidence in economy and in turn losing confidence in their own situation too and hence spending will reduce. Hence bad news on economy could hurt the economy. But the author fails to consider this possibility.

(D)people who have little confidence in the overall economy generally take a pessimistic view concerning their own immediate economic situations

Option (D) says the same as above - if people who have little confidence in economy have less confidence in their own economic situation too, bad news on economy could actually lead to less spending and hence making the economy suffer. 
Correct

KarishmaB · Answer

The little confidence in the economy is created by bad news. That leads to little confidence in own economic situation. That leads to less spending.

RohitSaluja · Answer

Hi  VeritasKarishma , I am sorry to bother you again, but can you please elaborate. I am not sure I got this statement

KarishmaB · Answer

The argument tells us that 'bad news' damages 'people's confidence in the economy' i.e. 'bad news' creates the situation in which people have 'little confidence in the economy'.

Option (D) tells us people who have little confidence in the overall economy generally take a pessimistic view concerning their own immediate economic situations

So if people have less confidence in economy, they have less confidence in their own situation too.

Thekingmaker · Answer

Experts please do make a very cleae distiction on A and D , i couldn't hence flunked the 50 percent chance for making it correct.......................so that i can understand the trap behind it.............

MBAB123 · Answer

Thekingmaker , I'm no expert but see if this helps you. A lot of people have explained the option D in detail above so I'm only going to discuss option A. Option A - one’s level of confidence in one’s own economic situation affects how one perceives reports about the overall state of the economy . A is actually leaning towards the point that one's level of confidence in one's own economic situation (let's call it X) is actually what impacts the people's perception of the state of the economy. The option is supporting the economist's argument by saying that X is important and X is probably the thing that governs people's spending habits. A is definitely the opposite of what we need! We need something to say that Media critics are not wrong and the overall state of the economy affects the people's spending habits. I understand how A can be confusing, but hopefully this clears thing up a bit.

unraveled · Answer

Economist: Some critics of the media have contended that negative news reports on the state of the economy can actually harm the economy because such reports damage people’s confidence in it, and this lack of confidence in turn adversely affects people’s willingness to spend money. But studies show that spending trends correlate very closely with people’s confidence in their own immediate economic situations. Thus these media critics are mistaken.

The economist’s argument is flawed in that it fails to consider the possibility that

The economist’s argument is flawed in that it fails to consider the possibility that 
 (A)  one’s level of confidence in one’s own economic situation affects how one perceives reports about the overall state of the economy - WRONG. Enticing but this presents the situation in a reverse cause order as presented in the passage. Is it overall state of the economy that affects the confidence or otherwise? 
 (B)  news reports about the state of the economy are not  always accurate  - WRONG. Irrelevant. 
 (C)  people  who pay no attention to economic reports in the media  always judge accurately whether their own economic situation is likely to deteriorate or improve - WRONG. Irrelevant set of people the discussion on whom does nothing. 
 (D)  people who have little confidence in the overall economy generally take a pessimistic view concerning their own immediate economic situations - CORRECT. POE helps. The set of the people discussed seems to be irrelevant but it does weaken, even of little, the passage. 
 (E)  an economic slowdown usually  has a greater impact on the economic situations of individuals  if it takes people by surprise than if people are forewarned - WRONG. Opposite situation given that is not at all concerned to the passage.

Answer D.

Haffun · Answer

Marty Murray 
 Please help us understand why option E can be eliminated. E seems to be a trap but not sure why.

MartyMurray · Answer

Economist: Some critics of the media have contended that negative news reports on the state of the economy can actually harm the economy because such reports damage people’s confidence in it, and this lack of confidence in turn adversely affects people’s willingness to spend money. But studies show that spending trends correlate very closely with people’s confidence in their own immediate economic situations. Thus these media critics are mistaken.

The economist’s argument is flawed in that it fails to consider the possibility that

The economist's conclusion is the following:

these media critics are mistaken (in contending that "negative news reports on the state of the economy can actually harm the economy because such reports damage people’s confidence in it, and this lack of confidence in turn adversely affects people’s willingness to spend money."

The support for the conclusion is the following:

studies show that spending trends correlate very closely with people’s confidence in their own immediate economic situations

We see that the economist has reasoned basically that, since people's spending is closely tied to their confidence in their own economic situations, their willingness to spend money won't be affected by negative news reports on the state of the economy and, thus, that the media's negative news reports don't actually harm the economy.

Now, let's consider (E).

(E) an economic slowdown usually has a greater impact on the economic situations of individuals if it takes people by surprise than if people are forewarned

Notice that, in saying "these media critics are mistaken," the economist is saying that negative news reports do NOT harm the economy.

Now, what does choice (E) indicate?

(E) indicates that, "if people are forewarned," an economic slowdown will have a smaller impact on individuals than it will if they are surprised.

So, how would they be forewarned? They would be forewarned by the media's negative news reports on the state of the economy.

We see that choice (E) indicates that the media's negative new reports may be helpful in that they may help to reduce the impacts of an economic slowdown by forewarning people.

Of course, the idea that the reports may be helpful is in line with the economist's conclusion that critics of the media are mistaken in thinking the media's news reports harm the economy.

So, the economist's argument doesn't need to consider the possibilty presented by (E) because that possibility is in line with the argument.

VerbalBot · Answer

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Economist: Some critics of the media have contended

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Economist: Some critics of the media have contended

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