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

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Senior Manager
Joined: 17 Mar 2009
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In 1992, 5 percent of every dollar paid in tax went to [#permalink]

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18 Aug 2009, 09:04
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79% (02:33) correct 21% (01:57) wrong based on 46 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.

OA later after discussion..
Intern
Joined: 30 Dec 2008
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18 Aug 2009, 09:25
1
KUDOS
There are two ways of explaining the apparent paradox:
- tax "revenues" decreased more than the unemployment rate, i.e. there were fewer funds available to pay for only slightly fewer unemployed people
- tax "costs" increased more than the decrease in unemployment, i.e. the administration paid much more to marginally fewer unemployed people

A fits in the second category, while B, D and E all fit in the first category. This leaves C. The structure of tax collected is irrelevant here. We're interested in the way it's spent, not collected.

Last edited by DanaJ on 18 Aug 2009, 11:45, edited 1 time in total.
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18 Aug 2009, 11:04
DanaJ wrote:
There are two ways of explaining the apparent paradox:
- tax "revenues" decreased more than the unemployment rate, i.e. there were fewer funds available to pay for only slightly fewer unemployed people
- tax "costs" increased more than the decrease in unemployment, i.e. the administration paid much more to marginally fewer unemployed people

A fits in the second category, while B, D and E all fit in the first category. This leaves B. The structure of tax collected is irrelevant here. We're interested in the way it's spent, not collected.

is there any typo error?, You seem to have missed mentioning option C in your explanation,.. your analysis is very good,

IMO C seems to be the answer, who paid more tax individuals or enterprises does not resolve the paradox,
Intern
Joined: 30 Dec 2008
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18 Aug 2009, 11:45
Yes, it was a typo. You are right
Senior Manager
Joined: 17 Mar 2009
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19 Aug 2009, 07:15
OA: C
Senior Manager
Joined: 20 Mar 2008
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19 Aug 2009, 08:22
C for me: No info provided between people & corporations!
Manager
Joined: 09 Aug 2009
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19 Aug 2009, 10:39
+1 C
Director
Joined: 25 Oct 2008
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Location: Kolkata,India

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24 Aug 2009, 22:17
The question asks.. increase in percent of every dollar paid in tax to support the unemployed citizens what does that mean?
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24 Aug 2009, 22:43
tejal777 wrote:
The question asks.. increase in percent of every dollar paid in tax to support the unemployed citizens what does that mean?

If unemployment rate decreases, the money spend to support must also decrease, but instead it has increased. so how?
What could resolve this paradox? decrease in unemployment at the same time increase in dollar to support it.. hope this helps. If not let me know. But the actual question is which doesnot resolve the paradox, note the "EXCEPT" at the end.
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18 May 2011, 02:02
crystal C here.
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Status: Completed GMAT on 22 Nov 2011
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09 Jun 2011, 05:52
Another C
Re: unemployment rate   [#permalink] 09 Jun 2011, 05:52
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