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# In 1992, 5 percent of every dollar paid in tax went to

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In 1992, 5 percent of every dollar paid in tax went to [#permalink]

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25 Sep 2010, 02:24
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63% (02:25) correct 37% (01:46) wrong based on 492 sessions

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In 1992, 5 percent of every dollar paid in tax went to support the unemployed citizens. In 1998,8 percent of every dollar paid in tax went to such funds, although that unemployment rate has decreased in 1998 than in 1992.
Each of the following, if true, could explain the simultaneous increase in percent of every dollar paid in tax to support the unemployed citizens and decrease in the number of unemployment rate EXCEPT:

A. On average, each unemployed citizen received more money in 1998 than 1992.

B. On average, people paid less tax in 1998 than in 1992.

C. The individuals had paid more tax than did enterprises during this period.

D. Income before tax has significantly decreased since 1992.

E. The number of tax evaders rose sharply between 1992 and 1998.

Plz explain this one..
[Reveal] Spoiler: OA
If you have any questions
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25 Sep 2010, 02:39
Its C - out of the scope of information provided in question.
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28 Sep 2010, 20:00
Narrowed down on option C and D.

D. Income before tax has significantly decreased since 1992 -- figured out that if the income reduced since 1992, to keep up with the same level of tax, the percentage of income taxed should move up and that explains the increase in the tax %.

Hence option C should be the answer.

Option A, B and E was easy to eliminate because of straight forward logic.
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16 Mar 2011, 01:44
In 1992, 0.5T1 = Allowance-1

In 1998, 0.8T2 = Allowance-2

T1 - Tax Money in 1992
T2 - Tax Money in 1998

A. On average, each unemployed citizen received more money in 1998 than 1992. - Hence more Money was be given by increasing Allowance, it's clear that Allowance-2 > Allowance-1.

B. On average, people paid less tax in 1998 than in 1992. Hence more Money should be given by increasing Allowance, as T2 is less.

C. The individuals had paid more tax than did enterprises during this period. Awkward choice.

D. Income before tax has significantly decreased since 1992. Hence more Money should be given by increasing Allowance, as T2 is less

E. The number of tax evaders rose sharply between 1992 and 1998. Hence more Money should be given by increasing Allowance, as T2 is less

So it's clear from answer choices that except C, all other account for increase in Allowance or Decrease in Tax Money. So the answer is C.
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16 Mar 2011, 03:29
Comparison should be between tax paid in 1992 and in 1998,not between individual groups.
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16 Mar 2011, 04:35
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We are looking for an option that says that lesser total amount of support was provided (since less no of people were unemployed) in 1998 than in 1992. If per dollar of tax more cents were taken, the total amount of dollars should decrease from 1992 to 1998 to make the product lesser. i.e. if 8 % of Y< 5 % of X, clearly Y should be less than X.
So any option which says less total tax was collected in 1998 than that collected in 1992 is correct. Lets check:
B says directly that less tax was paid in 1998, E says tax evaders were more in 1998 which can imply that total tax collected decreased, and D says that income itself decreased, which means tax wouls have decreased too. B, E, D eliminated.
A says that the support provided per person was more in 1998- this provides for less no . of people to support- as the product which is total support would still remain as much or more in 1992. thus it supports too.

C is irrelevant and doesnt support.
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17 Mar 2011, 12:54
was down to A and C.. Went with C
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Re: In 1992, 5 percent of every dollar paid in tax went to [#permalink]

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04 Aug 2014, 03:56
we can easily eliminate A B and e which leave us with two c and d
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Re: In 1992, 5 percent of every dollar paid in tax went to [#permalink]

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05 Aug 2015, 00:32
Whether individuals or enterprises paid more tax does not explain why there is increase in percentage of per dollar tax paid to unemployed. Hence C is right.
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Re: In 1992, 5 percent of every dollar paid in tax went to [#permalink]

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19 Feb 2017, 03:08
I dont why A is incorrect - what does it have to do with tax rate rising and unemployment falling?; its irrelevant. Please help. Thanks.
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Re: In 1992, 5 percent of every dollar paid in tax went to [#permalink]

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19 Feb 2017, 05:04
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Expert's post
OreoShake wrote:
I dont why A is incorrect - what does it have to do with tax rate rising and unemployment falling?; its irrelevant. Please help. Thanks.

The argument states the following:
1992:Money available for unemployed people = M1 (5%), No. of unemployed people N1 (high).
1998: Money available for unemployed people = M2 (8%) , No. of unemployed people N2 (low).

M2>M1, and N2<N1.

A straight mathematical explanation for the above is:
M2/N2 > M1/N1

i.e. each person receives more money in 1998 than in 1992.

Thus A can explain the discrepancy and hence is incorrect.
Re: In 1992, 5 percent of every dollar paid in tax went to   [#permalink] 19 Feb 2017, 05:04
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