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# Household indebtedness, which some theorists regard as

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Household indebtedness, which some theorists regard as [#permalink]

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27 Jun 2007, 13:12
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Household indebtedness, which some theorists regard as causing recession, was high preceding the recent recession, but so was the value of assets owned by households. Admittedly, if most of the assets were owned by quite affluent households, and most of the debt was owed by low-income households, high household debt levels could have been the cause of the recession despite high asset values: low-income households might have decreased spending in order to pay off debts while the quite affluent ones might simply have failed to increase spending. But, in fact, quite affluent people must have owed most of the household debt, since money is not lent to those without assets. Therefore, the real cause must lie elsewhere.

10. The argument is structured to lead to which one of the following conclusions?

(A) High levels of household debt did not cause the recent recession.
(B) Low-income households succeeded in paying off their debts despite the recent recession.
(C) Affluent people probably increased their spending levels during the recent recession.
(D) High levels of household debt have little impact on the economy.
(E) When people borrowed money prior to the recent recession, they did not use it to purchase assets.

11. Which one of the following, if true, casts the most doubt on the argument?

(A) Prior to the recent recession, middle-income households owed enough debt that they had begun to decrease spending.
(B) The total value of the economy’s household debt is exceeded by the total value of assets held by households.
(C) Low-income households somewhat decreased their spending during the recent recession.
(D) During a recession the affluent usually borrow money only in order to purchase assets.
(E) Household debt is the category of debt least likely to affect the economy.

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Re: 1000CR - Household indebtedness and recession (2x) [#permalink]

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27 Jun 2007, 23:55
Andr359 wrote:
Household indebtedness, which some theorists regard as causing recession, was high preceding the recent recession, but so was the value of assets owned by households. Admittedly, if most of the assets were owned by quite affluent households, and most of the debt was owed by low-income households, high household debt levels could have been the cause of the recession despite high asset values: low-income households might have decreased spending in order to pay off debts while the quite affluent ones might simply have failed to increase spending. But, in fact, quite affluent people must have owed most of the household debt, since money is not lent to those without assets. Therefore, the real cause must lie elsewhere.

10. The argument is structured to lead to which one of the following conclusions?

(A) High levels of household debt did not cause the recent recession.
(B) Low-income households succeeded in paying off their debts despite the recent recession.
(C) Affluent people probably increased their spending levels during the recent recession.
(D) High levels of household debt have little impact on the economy.
(E) When people borrowed money prior to the recent recession, they did not use it to purchase assets.

11. Which one of the following, if true, casts the most doubt on the argument?

(A) Prior to the recent recession, middle-income households owed enough debt that they had begun to decrease spending.
(B) The total value of the economy’s household debt is exceeded by the total value of assets held by households.
(C) Low-income households somewhat decreased their spending during the recent recession.
(D) During a recession the affluent usually borrow money only in order to purchase assets.
(E) Household debt is the category of debt least likely to affect the economy.

C and B in my opinion.

Q10 - C in my opinion. But, in fact, quite affluent people must have owed most of the household debt, since money is not lent to those without assets. Therefore, the real cause must lie elsewhere tells me that the author thinks that affluent people are the ones who borrowed a lot of money using their belongings as collateral.

Q11 - B in my opinion. This choice tells us that the author is wrong to assume that the low income households can't borrow because they don't have the personal belongings to use as a collateral. The debt was more than the total value of the assets and hence loans were given on some criteria other than the value of the assets a household possessed.
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28 Jun 2007, 06:24
10 - E
11- D

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28 Jun 2007, 06:55
10. A
11. B

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28 Jun 2007, 07:56
10. D

11. E

A) Support the conclusion rather than weaken
B) Irrelevant
C) If anything, support
D) Support
E) is the only one that weakens.

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28 Jun 2007, 08:53
Andr, could you please post the OA with OE now?
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28 Jun 2007, 09:22
A
B

The second question was pretty tough, I basically got to it by eliminating the other choices.

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28 Jun 2007, 12:51
D and C for me. THis was tough

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28 Jun 2007, 19:22
The OAs are A, A.

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28 Jun 2007, 19:40
Andr359 wrote:
The OAs are A, A.

OE's will also be appreciated.
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28 Jun 2007, 22:10
a pretty terrible staff

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02 Jul 2007, 10:49
These are from 1000CR, and they come without OEs.

Nevertheless, one can observe that, in #10, the premises point to a single evident statement: high household debt was not influential in the development of recession.

In #11, we need an statement that includes household debt and recession (or signs of the beginning of recession, like decreased spending) => A.

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02 Jul 2007, 10:49
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