If interest rates remain at their current high levels, many : GMAT Critical Reasoning (CR)
Check GMAT Club Decision Tracker for the Latest School Decision Releases https://gmatclub.com/AppTrack

 It is currently 22 Feb 2017, 21:51

### 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

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# If interest rates remain at their current high levels, many

Author Message
TAGS:

### Hide Tags

Moderator
Joined: 01 Sep 2010
Posts: 3133
Followers: 806

Kudos [?]: 6774 [5] , given: 1049

If interest rates remain at their current high levels, many [#permalink]

### Show Tags

07 May 2013, 14:37
5
KUDOS
5
This post was
BOOKMARKED
00:00

Difficulty:

65% (hard)

Question Stats:

55% (02:48) correct 45% (01:29) wrong based on 319 sessions

### HideShow timer Statistics

If interest rates remain at their current high levels, many people who currently rent their residences
will hesitate to purchase homes.
As the price of real estate continues to climb, the costs of a mortgage will be
too burdensome. Sellers will be forced to lower their asking prices. So, high interest rates will eventually
cause the real estate market to stabilize.

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

• The first is the author’s main point; the second is a prediction that follows from that point.
• The first is a consideration that the author believes will result in a certain situation; the second is that situation.
• The first is a consideration that weighs against the author’s main point; the second is the author’s main point.
• The first is a prediction; the second is evidence in support of that prediction.
• The first is the author’s main point; the second is evidence used to argue against that point.
[Reveal] Spoiler: OA

_________________
If you have any questions
New!
Moderator
Joined: 01 Sep 2010
Posts: 3133
Followers: 806

Kudos [?]: 6774 [0], given: 1049

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

07 May 2013, 16:10
up4gmat wrote:

Provide explanations, though.

regards
_________________
Verbal Forum Moderator
Joined: 15 Jun 2012
Posts: 1153
Location: United States
Followers: 263

Kudos [?]: 2909 [1] , given: 123

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

07 May 2013, 23:34
1
KUDOS
Very very tricky question, indeed. IMO, B is correct.

Here is my 2 cents.

Interest rates remain high ==> prices of homes increase ==> People stop purchasing homes ==> In turn, people will stop selling homes, because there's no demand
==> The real estate market is frozen because there's no buyers and no sellers. ==> Equilibrium point / Stabilization

Hence, B is correct.
_________________

Please +1 KUDO if my post helps. Thank you.

"Designing cars consumes you; it has a hold on your spirit which is incredibly powerful. It's not something you can do part time, you have do it with all your heart and soul or you're going to get it wrong."

Chris Bangle - Former BMW Chief of Design.

Moderator
Joined: 01 Sep 2010
Posts: 3133
Followers: 806

Kudos [?]: 6774 [0], given: 1049

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

08 May 2013, 02:36
OE

Quote:
The question asks us to analyze the structure of the argument. Specifically, we
are asked to determine the respective roles of the two portions in boldface. To do
so, we need first to find the conclusion of the argument and then determine the
relationship of each boldface portion to that conclusion.
The author argues that high interest rates will cause people to refrain from buying
homes because their mortgage costs will be too high. In turn, sellers will be
forced to lower their asking prices. In the end, this chain of events will work to
stabilize the real estate market. So the last sentence, which happens to be the
second boldface portion, is the conclusion. The first boldface portion is a fact that
the author belives will lead to the stabilization of the market. We need to find a
choice that reflect this assessment.
(A) The first portion is not the author's main point (another term for conclusion).
(B) CORRECT. The first portion is indeed a consideration that the author
believes will result in a particular situation, namely the stabilization of the market.
The second is indeed that situation.
(C) The first portion does not weigh against (contradict) the author's main point
(conclusion).
(D) The first is indeed a prediction, but the second portion is not evidence -- it is
the conclusion.
(E) The first portion is not the main point (conclusion).

_________________
Manager
Joined: 13 Dec 2012
Posts: 110
GMAT 1: Q V
Followers: 4

Kudos [?]: 20 [0], given: 19

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

08 May 2013, 05:15
1
This post was
BOOKMARKED
doubt if this is a 700+ question ..... between 600-700 may be
Manager
Joined: 25 Mar 2013
Posts: 59
WE: Project Management (Telecommunications)
Followers: 0

Kudos [?]: 30 [0], given: 52

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

21 Aug 2013, 06:04
I was thinking between A and C, and I can't understand why B is correct.

B says:
The first is a consideration that the author believes will result in a certain situation; the second is that situation.

If paraphrased, it means to me that second (stable market) is a situation and then the first one (people hesitating to buy homes) follows that situation. However, it is exactly the opposite in the question stem: people hesitating to buy homes eventually leads to stable market.

Please correct me if I am wrong.
Manager
Status: Persevering
Joined: 15 May 2013
Posts: 225
Location: India
GMAT Date: 08-02-2013
GPA: 3.7
WE: Consulting (Consulting)
Followers: 1

Kudos [?]: 87 [0], given: 34

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

21 Aug 2013, 10:18
happyinlove505 wrote:
I was thinking between A and C, and I can't understand why B is correct.

B says:
The first is a consideration that the author believes will result in a certain situation; the second is that situation.

If paraphrased, it means to me that second (stable market) is a situation and then the first one (people hesitating to buy homes) follows that situation. However, it is exactly the opposite in the question stem: people hesitating to buy homes eventually leads to stable market.

Please correct me if I am wrong.

IMO B,

I think you misunderstood it; The first is a condition that leads to the second and not the other way around. High interest rates lead to stabilization, but you cannot say stabilization leads to high interest rates.
_________________

--It's one thing to get defeated, but another to accept it.

Verbal Forum Moderator
Joined: 15 Jun 2012
Posts: 1153
Location: United States
Followers: 263

Kudos [?]: 2909 [1] , given: 123

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

21 Aug 2013, 17:59
1
KUDOS
happyinlove505 wrote:
I was thinking between A and C, and I can't understand why B is correct.

B says:
The first is a consideration that the author believes will result in a certain situation; the second is that situation.

If paraphrased, it means to me that second (stable market) is a situation and then the first one (people hesitating to buy homes) follows that situation. However, it is exactly the opposite in the question stem: people hesitating to buy homes eventually leads to stable market.

Please correct me if I am wrong.

Hi happyinlove505

This question requires you to have some backgrounds of economics.

Your first understanding: "people hesitating to buy homes eventually leads to stable market ==> B is illogical" is not correct. Why?
First of all, stable market happens when demand and supply meet. If customers hesitate to buy homes, the demand declines. If the supply does not decline or declines faster than demand, we have a situation, namely "over supply", leading to UNSTABLE market, not stable market.

Why B is correct?

B seems to be illogical but it's correct. Let see.
The logic of B is:high interest rates --> sub-effect: stable market --> main-effect: people hesitate to buy homes.
The idea that B wants to conveys is: A belief (People hesitate to buy home) will happens in a situation (stable market when interest rate is high).
"High interest rate" is KEY and the main CONDITION leading to the effect "people hesitate to buy homes". The fact "stable market" is just the situation that reflects "high interest rates". If the market is stabilized NOT because of "high interest rate", the logic "people hesitate to buy homes in a stable market" is wrong.

That's why B means "people hesitate to buy homes in a situation - stable market" is correct.

Hope it helps.
_________________

Please +1 KUDO if my post helps. Thank you.

"Designing cars consumes you; it has a hold on your spirit which is incredibly powerful. It's not something you can do part time, you have do it with all your heart and soul or you're going to get it wrong."

Chris Bangle - Former BMW Chief of Design.

Intern
Joined: 09 Sep 2012
Posts: 31
Followers: 0

Kudos [?]: 15 [1] , given: 2

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

21 Aug 2013, 19:37
1
KUDOS
If interest rates remain at their current high levels, many people who currently rent their residences
will hesitate to purchase homes.
As the price of real estate continues to climb, the costs of a mortgage will be
too burdensome. Sellers will be forced to lower their asking prices. So, high interest rates will eventually
cause the real estate market to stabilize.

high interest --> people hesitate buy home
real estate high + high interest, --> mortgage cost high --> lower real estate
conclusion: real estate market stabilizes

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

• The first is the author’s main point; the second is a prediction that follows from that point.
The first is NOT the author’s main point;

• The first is a consideration that the author believes will result in a certain situation; the second is that situation.
correct

• The first is a consideration that weighs against the author’s main point; the second is the author’s main point.
The first is a consideration that NOT weighs against the author’s main point

• The first is a prediction; the second is evidence in support of that prediction.
The first is NOT a prediction

• The first is the author’s main point; the second is evidence used to argue against that point.
the second is NOT evidence used to argue against that point
_________________

Vietnam's number one online service on thit bo nhap khau

Manager
Joined: 25 Mar 2013
Posts: 59
WE: Project Management (Telecommunications)
Followers: 0

Kudos [?]: 30 [0], given: 52

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

21 Aug 2013, 21:31
pqhai wrote:
Hi happyinlove505

This question requires you to have some backgrounds of economics.
...
That's why B means "people hesitate to buy homes in a situation - stable market" is correct.

Hope it helps.

Hello pqhai,

I reviewed your explanation several times, but still could not understand
However, not I think I see where my understanding was wrong.

When I first read B, I misinterpreted "The first is a consideration that ... will result in a certain situation" as certain situation will lead to consideration or first. In other words consideration will happen in a situation:)
However, now I see that situation is actually a result of consideration
GMAT Club Legend
Joined: 01 Oct 2013
Posts: 10624
Followers: 941

Kudos [?]: 207 [0], given: 0

Re: If interest rates remain at their current high levels, many [#permalink]

### Show Tags

27 Aug 2014, 01:27
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Re: If interest rates remain at their current high levels, many   [#permalink] 27 Aug 2014, 01:27
Similar topics Replies Last post
Similar
Topics:
1 When interest rates are low, classical economics predicts that a 1 12 Sep 2016, 08:46
3 When interest rates are high, insurance companies reduce the 2 12 Nov 2013, 23:22
19 In response to a high unemployment rate and to complaints 16 19 Oct 2013, 23:50
The use of pesticides containing high levels of toxins is 16 20 Feb 2010, 19:57
1 If interest rates remain at their current high levels, many 10 02 Nov 2007, 17:57
Display posts from previous: Sort by