Events & Promotions
|
|
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.
Customized
for You
Track
Your Progress
Practice
Pays
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Nov 1811:00 AM PST
-12:00 PM PST
Join us in a live GMAT practice session and solve 30 challenging GMAT questions with other test takers in timed conditions, covering GMAT Quant, Data Sufficiency, Data Insights, Reading Comprehension, and Critical Reasoning questions.
Nov 2211:00 AM IST
-01:00 PM IST
Do RC/MSR passages scare you? e-GMAT is conducting a masterclass to help you learn – Learn effective reading strategies Tackle difficult RC & MSR with confidence Excel in timed test environment- Nov 23
11:00 AM IST
-01:00 PM IST
Attend this free GMAT Algebra Webinar and learn how to master the most challenging Inequalities and Absolute Value problems with ease. 
Nov 2510:00 AM EST
-11:00 AM EST
Prefer video-based learning? The Target Test Prep OnDemand course is a one-of-a-kind video masterclass featuring 400 hours of lecture-style teaching by Scott Woodbury-Stewart, founder of Target Test Prep and one of the most accomplished GMAT instructors.
18 Feb 2020, 03:09
Kudos
Bookmarks
A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
65%
(hard)
Question Stats:
64% (02:23) correct
36%
(02:31)
wrong
based on 809
sessions
History
Date
Time
Result
Not Attempted Yet
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.
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.
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.
18 Apr 2020, 07:43
Kudos
Bookmarks
[quote="Bunuel"]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.
ARGUMENT
House debt : [HIGH] and
House Assets Value[HIGH] RECESSION
----t----------------------------------t+
time-axis
Author admits : IF Debt owned by Lower-income and Assets owned by Affluent => Recession COULD BE function(high household debt)
Author puts forward another possibility which is the main point: (premise) Affluent people indirectly owns the debt. Therefore, cause of recession may be something else.
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.- Cleary meant by the author
(B) Low-income households succeeded in paying off their debts despite the recent recession. - Out of scope. Not discussed
(C) Affluent people probably increased their spending levels during the recent recession.- In contradiction to what is mentioned in the passage.Also, not the point of author's argument.
(D) High levels of household debt have little impact on the economy. - Out of scope. No discussion about the Impact of recession
(E) When people borrowed money prior to the recent recession, they did not use it to purchase assets. Not discussed in the passage. Trap option as it uses two keywords household debt and assets. Also this option is not even the premise used by the author to support the second possibility.
Correct Answer - A
ARGUMENT
House debt : [HIGH] and
House Assets Value[HIGH] RECESSION
----t----------------------------------t+
time-axis
Author admits : IF Debt owned by Lower-income and Assets owned by Affluent => Recession COULD BE function(high household debt)
Author puts forward another possibility which is the main point: (premise) Affluent people indirectly owns the debt. Therefore, cause of recession may be something else.
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.- Cleary meant by the author
(B) Low-income households succeeded in paying off their debts despite the recent recession. - Out of scope. Not discussed
(C) Affluent people probably increased their spending levels during the recent recession.- In contradiction to what is mentioned in the passage.Also, not the point of author's argument.
(D) High levels of household debt have little impact on the economy. - Out of scope. No discussion about the Impact of recession
(E) When people borrowed money prior to the recent recession, they did not use it to purchase assets. Not discussed in the passage. Trap option as it uses two keywords household debt and assets. Also this option is not even the premise used by the author to support the second possibility.
Correct Answer - A
08 Apr 2024, 05:04
Kudos
Bookmarks
Understanding the argument -
Household indebtedness, which some theorists regard as causing a recession, was high preceding the recent recession, but so was the value of assets owned by households. - Background. Most importantly, when the author says, "which some theorists regard as causing recession," we should expect the alternative view. And "but" presents the first such objection to the views of these "some theorists."
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. - The author explains that had some theorist's "belief" been true, what would the reasoning have looked like?
But, in fact, quite affluent people must have owed most of the household debt since money is not lent to those without assets. - " But" introduces the contrast. It shares 180 degrees of opposite observation. As against "some theorists" based on whom most lower-income households could have opened this debt, this statement states the other way around. It's the affluent households who own most of this debt. What is the reason for this?
Therefore, the real cause must lie elsewhere. - Conclusion. Why must it lie somewhere else? Because even if most of the affluent households held most of the debt, there is no evidence that they decreased spending. As the argument goes, they may have failed to increase spending. Even if they keep spending the same, household indebtedness is the unlikely cause of recession. There needs to be an alternate reason for the recession.
The argument is structured to lead to which one of the following conclusions?
Option Elimination -
(A) High levels of household debt did not cause the recent recession. - ok
(B) Low-income households succeeded in paying off their debts despite the recent recession. - opposite.
(C) Affluent people probably increased their spending levels during the recent recession. - opposite to the statement mentioned in the argument, "the quite affluent ones might simply have failed to increase spending."
(D) High levels of household debt have little impact on the economy. - Not implied. The author just states that in this situation household indebtedness is not the cause of recession. Out of scope.
(E) When people borrowed money prior to the recent recession, they did not use it to purchase assets. - We don't know what they spent it on. Out of scope.
Household indebtedness, which some theorists regard as causing a recession, was high preceding the recent recession, but so was the value of assets owned by households. - Background. Most importantly, when the author says, "which some theorists regard as causing recession," we should expect the alternative view. And "but" presents the first such objection to the views of these "some theorists."
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. - The author explains that had some theorist's "belief" been true, what would the reasoning have looked like?
But, in fact, quite affluent people must have owed most of the household debt since money is not lent to those without assets. - " But" introduces the contrast. It shares 180 degrees of opposite observation. As against "some theorists" based on whom most lower-income households could have opened this debt, this statement states the other way around. It's the affluent households who own most of this debt. What is the reason for this?
Therefore, the real cause must lie elsewhere. - Conclusion. Why must it lie somewhere else? Because even if most of the affluent households held most of the debt, there is no evidence that they decreased spending. As the argument goes, they may have failed to increase spending. Even if they keep spending the same, household indebtedness is the unlikely cause of recession. There needs to be an alternate reason for the recession.
The argument is structured to lead to which one of the following conclusions?
Option Elimination -
(A) High levels of household debt did not cause the recent recession. - ok
(B) Low-income households succeeded in paying off their debts despite the recent recession. - opposite.
(C) Affluent people probably increased their spending levels during the recent recession. - opposite to the statement mentioned in the argument, "the quite affluent ones might simply have failed to increase spending."
(D) High levels of household debt have little impact on the economy. - Not implied. The author just states that in this situation household indebtedness is not the cause of recession. Out of scope.
(E) When people borrowed money prior to the recent recession, they did not use it to purchase assets. - We don't know what they spent it on. Out of scope.
