Bunuel 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.
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.
Project CR Butler: Critical Reasoning
For all CR butler Questions Click HereConclusion: Household indebtedness did not cause the recent recession.
Why?
The author based his conclusion on the INTERMEDIATE conclusion that “the quite affluent must have owned most of household debt” because money is not lent to households without asset, so most of household debt and assets were owned by the SAME group of households: the QUITE AFFLUENT households, who could have used their assets to pay for their debt and, so, did not have to DECREASE their SPENDING. Because the authors believes that decreased spending causes recession, he draws the conclusion that household indebtedness did not cause the recent recession.
Goal: find an answer choice that, if true, would most WEAKEN the conclusion above.
(A) Prior to the recent recession, middle-income households owed enough debt that they had begun to decrease spending.
The argument addressed only HIGH-income households (the quite affluent households) and LOW-income households but concluded about HOUSEHOLD indebtedness in general. This is a leap in SCOPE. What did the MIDDLE-income households do before the recession? (A) tells us that BEFORE the recent recession, MIDDLE-income households owned enough DEBT that they had begun to DECREASE SPENDING. So, middle-income households owned debt that actually caused them to decrease spending before the recession (note that the authors believes that decreased spending causes recession). Therefore, (A) suggests that household indebtedness (by middle-income households) may have caused spending to decrease before the recession . This breaks the INTERMEDIATE CONCLUSION and the overall conclusion of the author.
Keep (A).
(B) The total value of the economy’s household debt is exceeded by the total value of assets held by households.
Notice the tense used in (B): The total value of the economy’s household debt IS exceeded by the total value of assets held by households. So (B) seems to talk about the present situation but the argument is concerned about whether household indebtedness CAUSED the recent recession, which happened.
Even if the fact stated in (B) applies across time, (B) does not weaken the conclusion. The author said that household indebtedness and value of assets were BOTH high before the recession, and reasoned that because most of debt and assets must have been owned by the same group of households, the quite affluent households, the assets could be used to cover the debt. (B) tells us that the value of assets was even greater than the value of household debt, a fact that somewhat strengthens the conclusion.
Eliminate (B).
(C) Low-income households somewhat decreased their spending during the recent recession.
(C) talks about what low-income households did DURING the recent recession. But the argument is concerned about the CAUSE of the recent recession which logically happened BEFORE the recession. (C) is irrelevant.
Eliminate (C).
(D) During a recession the affluent usually borrow money only in order to purchase assets.
As in (C), (D) talks about what the affluent do DURING a recession. Also, this is what the affluent, in general, USUALLY does during A recession, we do not know if that general pattern of behavior applies to THE recent recession in question.
Eliminate (D).
(E) Household debt is the category of debt least likely to affect the economy
(E) compares household debt ONLY with other kinds of debt in terms of likelihood to affect the economy: household debt is the category of debt LEAST likely to affect the economy. Even so, we do not know whether the likelihood of household debt to affect the economy is high or low: household debt could be the cause of the recent recession or not.
Eliminate (E)
Hence, (A) is correct.
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"The devil is in the detail"
18 Feb 2020, 02:09
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