Financial Expert: Our country has a very high debt-to-GDP ratio and it

Question

Financial Expert: Our country has a very high debt-to-GDP ratio and it’s difficult for a country with a high debt-to-GDP ratio to grow in a dynamic manner. Moreover, our debt is growing higher and that means inflation is getting worse. All in all, our country is badly managed these days.

Which of the following assertions is most strongly supported by the passage?

(A) High debt has an adverse impact on the inflation rate.

(B) It is not possible for a badly managed country to grow in a dynamic manner.

(C) High level of debt is extremely detrimental to the growth of a country.

(D) Growing inflation is a sign of a badly managed country.

(E) Whatever growth is happening in this particular country cannot possibly be called dynamic growth

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Rohit_842 · Answer

A is the correct answer. It is explicitly mentioned "our debt is growing higher and that means inflation is getting worse"

ToddlerandGMAT · Answer

Hello,

Can you please provide OA?
Why option D is incorrect?

Rohit_842 · Answer

The argument mentions 'overall' our country is badly managed. And to conclude this it takes into consideration atleast 2 things 1. High debt to GDP ratio and 2.growing debt which causes growing inflation. Option D only covers the 2nd aspect, as it could be possible that a country has low debt to GDP ratio along with growing inflation so I doubt we could conclude that this hypothetical country could be called badly managed. Hence D fails

Bunuel · Answer

Official Explanation

Answer: A

Since this is an Inference question, let’s look at each option and eliminate.

(A) The argument clearly states that increasing debt is worsening the inflation rate, so then  A can definitely be inferred.

(B) Cannot necessarily be concluded. We don’t even know what all things constitute a badly managed country, so then we definitely cannot conclude this.

(C) We know that high level of debt to GDP ratio is detrimental for the growth of a country but from this we cannot necessarily conclude that high level of debt by itself is extremely detrimental. If the GDP is also high then high level of debt could be a good thing.

(D) This may not necessarily be true because the argument states that all the things together constitute a badly managed country, but what is true for the whole may not be true for each part.

(E) The argument states that it’s difficult for this country to grow in a dynamic manner and not that it is impossible for this country to do so.

ahddhah · Answer

I have a problem with option A since first line can show only correlation not causation and for option A to be inferred we need to know if high inflation is impacted by increasing debt

capnmoron · Answer

Bunuel , option A states 'high debt', not 'increasing debt'. Hence, I am not able to infer how an already high debt would have any impact on inflation. It can be the case that inflation has stopped and debt is high. Please let me know if I am reading this wrong.

guddo · Answer

Financial Expert: Our country has a very high debt-to-GDP ratio and it’s difficult for a country with a high debt-to-GDP ratio to grow in a dynamic manner. Moreover, our debt is growing higher and that means inflation is getting worse. All in all, our country is badly managed these days. 
 
Which of the following assertions is most strongly supported by the passage?

The passage connects high debt with difficulty in dynamic growth, and it connects rising debt with worsening inflation.  So the safest supported idea is that debt has a negative effect on inflation .

(A) High debt has an adverse impact on the inflation rate.

This is correct. The passage says the country’s debt is growing higher, and that means inflation is getting worse. So the passage supports the idea that debt has a negative impact on  inflation .

(B) It is not possible for a badly managed country to grow in a dynamic manner.

This is too strong. The passage says high debt makes dynamic growth difficult, not impossible.

(C) High level of debt is extremely detrimental to the growth of a country.

This is also too strong. The passage says high debt makes dynamic growth difficult, but “extremely detrimental” goes beyond the wording.

(D) Growing inflation is a sign of a badly managed country.

This is tempting, but not directly supported. The expert concludes that the country is badly managed based on the whole situation: high debt, rising debt, worsening inflation, and weak growth prospects.

(E) Whatever growth is happening in this particular country cannot possibly be called dynamic growth.

This is too strong. The passage says dynamic growth is difficult with a high debt-to-GDP ratio, not that this country’s growth cannot possibly be dynamic.

Answer: (A)

egmat · Answer

Hi capnmoron,

Good, careful read, and I see exactly where the split is happening for you. You're treating  "high debt"  in (A) as a  frozen snapshot  - a country that already has a lot of debt but where nothing is moving - and asking how a static amount could touch inflation. That's a fair instinct, but notice it separates two things the passage keeps joined.

Look at what the country in the stimulus actually has:

- "a  very high  debt-to-GDP ratio" - the debt is high, and
- "our debt is  growing higher  and that means inflation is getting worse" - that same debt is climbing, and the climbing worsens inflation.

The debt that is growing  is  the high debt. The passage never describes a low debt that happens to be rising, and it never describes debt frozen in place with inflation stopped. So the very debt (A) calls "high" is the one the passage ties to worsening inflation. Reading (A) as "an already-high debt is having an adverse effect on inflation" fits the country described.

Two things worth remembering on an inference / "most strongly supported" question:

1. You want the choice the passage best supports  relative to the others  - not a word-for-word twin. (A) is a mild directional claim ("adverse impact"); the passage hands you a direct debt - worse-inflation link. Nothing else comes close.
2. "Adverse impact" is deliberately soft - it just means "pushes in a bad direction," which the stimulus explicitly states.

Quick knob-turn to feel it:

- If (A) said  "only rising debt"  affects inflation - still supported.
- If (A) said high debt has  "no impact"  - killed instantly.
- With  "adverse impact,"  it lands squarely on the stated link.

So you're not misreading the words - you're just holding "high" and "growing" apart when the passage presents them as one and the same debt.

Answer: A

Financial Expert: Our country has a very high debt-to-GDP ratio and it

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Financial Expert: Our country has a very high debt-to-GDP ratio and it

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