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# Economist: The economy of the Republic of Nantau has

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Manager
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Economist: The economy of the Republic of Nantau has  [#permalink]

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06 Oct 2011, 00:35
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Economist: The economy of the Republic of Nantau has experienced lower than expected growth in the past year, and the value of its currency has dropped against the Yen. As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease as people turn to cheaper domestic equivalents. However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

In the argument given, the two portions in boldface play which of the following roles?
(A) The first supplies a context for the argument; the second is the argument's main conclusion.
(B) The first introduces a development that the argument predicts will have a certain outcome; the second is a state of affairs that the argument denies will be part of that outcome.
(C) The first presents a development that the argument predicts will have a certain outcome; the second acknowledges a consideration that weighs against that prediction.
(D) The first provides evidence to support a prediction that the argument seeks to defend; the second is that prediction.
(E) The first and the second each provide evidence to support the argument's main conclusion.

Senior Manager
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06 Oct 2011, 10:06
Are you sure the answer is C? I have a problem with the will have a certain outcome vs will likely

I would choose A here. but would be happy to hear other people's thoughts about it.
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06 Oct 2011, 10:07
Would like to know the explanation too
Manager
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06 Oct 2011, 10:09
the answer is C, but i didnt quite get it myself.
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06 Oct 2011, 10:10
Mind posting the OE? What is the source?
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06 Oct 2011, 10:15
Its a GMAT Hacks Question. Here it is
http://www.gmatdaily.com/20111004-gmat- ... e-day.html
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06 Oct 2011, 10:31
I don't like the phrasing of the latter part of choice C but if broken down , I now agree that it is a better choice than B(my selection).
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06 Oct 2011, 10:51
Still unclear for me how Likely = Certain.
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06 Oct 2011, 11:35
Unclear for me too.. Could anyone please explain in detail.
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08 Oct 2011, 21:11

Can someone explain how 'an increase in trade surplus' contradicts 'a decrease in imports' ? If anything, a decrease in import will supplement an increase in trade surplus.

For, trade surplus = Net outward goods movement - Net inward goods movement.

I peg D to be the better option. But that's obviously wrong given that the OA is C!
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09 Oct 2011, 21:27
catfreak wrote:
and the value of its currency has dropped against the Yen.

Imports will be costlier and hence will definitely reduce the demand for luxury items.
Quote:
However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

Reduced imports means less usage of foreign currency and hence surplus of foreign currency in comparison with previous estimates.

Currency devaluation also means lower manufacturing cost when seen in terms of foreign currency.
e.g. the current devaluation of Indian Rupees against American Dollar.
This devaluation has resulted in increased cost of imports like cars, perfumes, electronics etc. But on the other hand Indian IT companies are posting stronger Quarter results. It is possible because, the main export these IT companies i.e. IT services is now cheaper in when seen in American Dollars. Labor rate for an hour remains the same (viz. \$50) but the same amount now fetches more in local currency. (INR 2500 Approx). So if the IT Engineer is paid INR 500 per hour, when the exchange rate was INR 42 per dollar (earning from IT service=INR 2100 - INR 500), the same export will cost less now (earning from IT service=INR 2500 - INR 500).
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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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06 May 2015, 16:35
catfreak wrote:
Economist: The economy of the Republic of Nantau has experienced lower than expected growth in the past year, and the value of its currency has dropped against the Yen. As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease as people turn to cheaper domestic equivalents. However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

In the argument given, the two portions in boldface play which of the following roles?
(A) The first supplies a context for the argument; the second is the argument's main conclusion.
(B) The first introduces a development that the argument predicts will have a certain outcome; the second is a state of affairs that the argument denies will be part of that outcome.
(C) The first presents a development that the argument predicts will have a certain outcome; the second acknowledges a consideration that weighs against that prediction.
(D) The first provides evidence to support a prediction that the argument seeks to defend; the second is that prediction.
(E) The first and the second each provide evidence to support the argument's main conclusion.

A tough one.
The development: the value of its currency has dropped against the Yen.
The prediction: As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease.
Against that prediction: a trade surplus
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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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15 Jun 2015, 09:10
catfreak wrote:
Economist: The economy of the Republic of Nantau has experienced lower than expected growth in the past year, and the value of its currency has dropped against the Yen. As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease as people turn to cheaper domestic equivalents. However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

In the argument given, the two portions in boldface play which of the following roles?
(A) The first supplies a context for the argument; the second is the argument's main conclusion.
(B) The first introduces a development that the argument predicts will have a certain outcome; the second is a state of affairs that the argument denies will be part of that outcome.
(C) The first presents a development that the argument predicts will have a certain outcome; the second acknowledges a consideration that weighs against that prediction.
(D) The first provides evidence to support a prediction that the argument seeks to defend; the second is that prediction.
(E) The first and the second each provide evidence to support the argument's main conclusion.

I think it should be A.
In question,statement 2 is negative effect and statement 3 is positive effect.As per the analysis,statement 3 is main conclusion.
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Economist: The economy of the Republic of Nantau has  [#permalink]

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15 Jun 2015, 21:11
ssriva2 wrote:
catfreak wrote:
Economist: The economy of the Republic of Nantau has experienced lower than expected growth in the past year, and the value of its currency has dropped against the Yen. As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease as people turn to cheaper domestic equivalents. However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

In the argument given, the two portions in boldface play which of the following roles?
(A) The first supplies a context for the argument; the second is the argument's main conclusion.
(B) The first introduces a development that the argument predicts will have a certain outcome; the second is a state of affairs that the argument denies will be part of that outcome.
(C) The first presents a development that the argument predicts will have a certain outcome; the second acknowledges a consideration that weighs against that prediction.
(D) The first provides evidence to support a prediction that the argument seeks to defend; the second is that prediction.
(E) The first and the second each provide evidence to support the argument's main conclusion.

I think it should be A.
In question,statement 2 is negative effect and statement 3 is positive effect.As per the analysis,statement 3 is main conclusion.

1) The value of its currency has dropped against the Yen - FACT

2) As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease - Prediction of an Outcome based on above fact.

3) ]However, this will likely help reverse the negative economic trends by creating a trade surplus as export goodsbecome cheaper - Providing conceding contrast i.e. author unwillingly agrees to statement 3 because it provides a counter reasoning to the authors main conclusion i.e. purchases of imported goods will likely decrease.

Hope this helps
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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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18 Jun 2015, 01:04
I am really confused between B & C,
If i follow the literal term "prediction", The conclusion (imported goods… will likely decrease) and the second bold face belong to the same category.
Should I rule out B because of it's tone?
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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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25 Jun 2015, 08:31
IMO :
After reading "C" thoroughly again it makes sense.

P1 : Economy slow growth. currency devalues. Import becomes costly.
Prediction: Import Demand decreases.

P2 :However, this will reverse the above said cycle. Export increases -> trade surplus increases-> causing Currency to rise again as surplus is increased. Therefore economy cycle reversed.

Looking at this chain of events it looks that 2nd bold face goes against the prediction after the 1st Bold face.

for me it looks if we can't establish a relation between trade surplus and increase of import cycle, then it's difficult to justify "C".
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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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04 Apr 2019, 06:32
catfreak wrote:
Economist: The economy of the Republic of Nantau has experienced lower than expected growth in the past year, and the value of its currency has dropped against the Yen. As a result, purchases of imported goods, such as usually luxury items or high-end electronics, will likely decrease as people turn to cheaper domestic equivalents. However, this will likely help reverse the negative economic trends by creating a trade surplus as export goods become cheaper.

In the argument given, the two portions in boldface play which of the following roles?

BF 1 is a fact statement. This statement affects some prediction/result mentioned in the next line.

BF 2 is the main point of the passage.

It is easier to eliminate statements as per BF 2.

Eliminate D: BF 2 is not a prediction.

Eliminate E : BF 2 itself is the main conclusion and not the evidence to support the main point.

Now use BF 1.

A : Not that much to eliminate. Keep it.

B : BF 2 does not support the certain outcome. Actually BF 2 is against the outcome.

C. CORRECT : BF 1 is just showing a development. BF 2 is against the outcome.

(A) The first supplies a context for the argument; the second is the argument's main conclusion.

(B) The first introduces a development that the argument predicts will have a certain outcome; the second is a state of affairs that the argument denies will be part of that outcome.

(C) The first presents a development that the argument predicts will have a certain outcome; the second acknowledges a consideration that weighs against that prediction.

(D) The first provides evidence to support a prediction that the argument seeks to defend; the second is that prediction.

(E) The first and the second each provide evidence to support the argument's main conclusion.

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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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05 Apr 2019, 09:43
I agree that C is not a good answer. The predicted outcome is that imports will become expensive. The fact that cheaper exports will reverse trade surplus does not weigh against that prediction - import will still become expensive.

Posted from my mobile device
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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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14 Jul 2019, 02:32
The second boldface does not weigh against the first prediction. Infact it is necessary for prediction 1 to hold true for the conclusion to be valid.

First is evidence for a prediction, second is the main conclusion

Posted from my mobile device
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Re: Economist: The economy of the Republic of Nantau has  [#permalink]

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14 Jul 2019, 07:01
Pls provide a suitable explanation for this.
Re: Economist: The economy of the Republic of Nantau has   [#permalink] 14 Jul 2019, 07:01
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