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Economist: Some policymakers believe that our country s

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Economist: Some policymakers believe that our country s  [#permalink]

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New post 16 Mar 2007, 10:35
1
3
00:00
A
B
C
D
E

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  95% (hard)

Question Stats:

34% (01:55) correct 66% (01:58) wrong based on 133 sessions

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Economist: Some policymakers believe that our country's continued economic growth requires a higher level of personal savings than we currently have. A recent legislative proposal would allow individuals to set up savings accounts in which interest earned would be exempt from taxes until money is withdrawn from the account. Backers of this proposal claim that its implementation would increase the amount of money available for banks to loan at a relatively small cost to the government in lost tax revenues. Yet, when similar tax-incentive programs were tried in the past, virtually all of the money invested through them was diverted from other personal savings, and the overall level of personal savings was unchanged.

The author criticizes the proposed tax-incentive program by

(A) challenging a premise on which the proposal is based
(B) pointing out a disagreement among policymakers
(C) demonstrating that the proposal's implementation is not feasible
(D) questioning the judgment of the proposal's backers by citing past cases in which they had advocated programs that have proved ineffective
(E) disputing the assumption that a program to encourage personal savings is needed
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 16 Mar 2007, 17:34
Vote A. The author does not believe that the special accounts will improve the amount of saving.
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 16 Mar 2007, 22:36
Tha proposal is not based on what the backers' say.They are just giving their opinion...I think D should be the answer??
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 17 Mar 2007, 08:13
I think it is A

Backers of this proposal claim that its implementation would increase the amount of money available for banks to loan

The author challenges the above
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 19 Mar 2007, 11:20
vineetgupta wrote:
Whats wrong with D??


D says that the author is specifically criticizing the backers of the proposal by pointing out other programs where their judgement has been wrong.

In the passage, the author points out that programs similar to the one proposed have been wrong - he says nothing about other programs the backers have supported in the past being wrong.

It's the difference between saying: "The backers support X. But X has been wrong in the past, so X is wrong now" and "The backers support X. But the backers have been wrong about Y and Z in the past, so they must be wrong about X."

I think the answer is A. The author is challenging the idea that offering the plan will increase the amount of savings. What is the OA?
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 19 Mar 2007, 11:52
I thought of D as well. Although I was a lil confused with the last line. Can someone help me understand the last line?

Thanks
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 19 Mar 2007, 17:18
Hey guys.

Without any other reasonings, D is a fallacy in concluding that because the past proposals were useless so the new proposal is also.
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 20 Mar 2007, 15:19
I also go with D. Seems quite obvious to me. Not sure of I am not thinking enough.

Whats OA?
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 21 Mar 2007, 06:04
I'll go with A

The backers of Legislative proposal base their support to the proposal based on a premise that implementation of the proposal would increase the amount of money available for banks to loan at a relatively small cost to the government in lost tax revenues.

The economist cites a specific example where such effect has not been observed. Thus, he questions the premise on which the proposal is based.

The economist does not directly question the judgment of the proposal’s backers. Hence D cannot be the answer.

I found this one tough... :?
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 21 Mar 2007, 18:28
I would go with A.

The purpose of the proposal is to increase the amount of personal savings (i.e. banks have more money to lend) but the author at the end refutes that a similar proposal (with seemingly similar purpose) failed because "the overall level of personal savings was unchanged."

Although it did not explicity say that the similar proposal in the past was a "failure", we can infer that it did not achieve its goal from the use of the word "yet" to introduce it.
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 16 Oct 2016, 06:13
OA is A I also go with D but after reread the D I found the author didn't question the judgement of the backers so I think that's the reason A is correct.
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 27 Nov 2019, 06:59
OA added and bumping for further discussion
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 28 Nov 2019, 10:31
D can be rejected because we do not know whether the backers of current legislation advocated previous programs or not.

regards
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 28 Nov 2019, 22:45
Even though OA is A I am confused here because the author is not challenging a premise... He is challenging an underlying assumption of policymakers that Tax incentives are enough to make people save more. nightblade354 GMATNinja sir please share your views..
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Re: Economist: Some policymakers believe that our country s  [#permalink]

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New post 11 Dec 2019, 02:21
vineetgupta wrote:
Economist: Some policymakers believe that our country's continued economic growth requires a higher level of personal savings than we currently have. A recent legislative proposal would allow individuals to set up savings accounts in which interest earned would be exempt from taxes until money is withdrawn from the account. Backers of this proposal claim that its implementation would increase the amount of money available for banks to loan at a relatively small cost to the government in lost tax revenues. Yet, when similar tax-incentive programs were tried in the past, virtually all of the money invested through them was diverted from other personal savings, and the overall level of personal savings was unchanged.

The author criticizes the proposed tax-incentive program by


Policy makers are suggesting to increase the savings in accounts to increase the loan providing capability of banks.
However, previous implementation of the plan did not provide the required effect. Instead, the balance remained the same and the public transferred money from one account to the new account

(A) challenging a premise on which the proposal is based
- the policy makers propose a plan - provide interest free savings to increase the amount available for loan.
Premise - interest free savings will encourage public to save more money.
The author says that people will not save money; people will simple transfer the money
-correct

(B) pointing out a disagreement among policymakers
- the disagreement is between author and policymakers.
-Wrong

(C) demonstrating that the proposal's implementation is not feasible
- feasibility of proposal implementation is not discussed.
-Wrong

(D) questioning the judgment of the proposal's backers by citing past cases in which they had advocated programs that have proved ineffective
- judgement of proposal's backers is that public will deposit extra money.
- this judgement is questioned by using the past reference case.
-correct

(E) disputing the assumption that a program to encourage personal savings is needed
- this is out of context
-wrong

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Re: Economist: Some policymakers believe that our country s   [#permalink] 11 Dec 2019, 02:21
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