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# In a recession, a decrease in consumer spending causes many businesses

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Intern
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In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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21 Dec 2017, 05:51
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35% (medium)

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69% (01:48) correct 31% (01:56) wrong based on 344 sessions

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In a recession, a decrease in consumer spending causes many businesses to lay off workers or even to close. Workers who lose their jobs in a recession usually cannot ﬁnd new jobs. The result is an increase in the number of people who are jobless. Recovery from a recession is deﬁned by an increase in consumer spending and an expansion of business activity that creates a need for additional workers. But businesspeople generally have little confidence in the economy after a recession and therefore delay hiring additional workers as long as possible.

The statements above, if true, provide the most support for which one of the following conclusions?

A. Recessions are usually caused by a decrease in Business people’s conﬁdence in the economy
B. Governmental intervention is required in order for an economy to recover from a recession
C. Employees of businesses that close during a recession make up the majority of the workers who lose their jobs during that recession
D. Sometimes recovery from a recession does not promptly result in a decrease in the number of people who are jobless
E. Workers who lose their jobs during a recession are likely to get equally good jobs when the economy recovers
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Re: In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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21 Dec 2017, 06:20
Summary: Recovery from recession does not result immediately result in increase in employment.

A. Recessions are usually caused by a decrease in Business people’s conﬁdence in the economy - Incorrect. It is not stated in the passage that decrease in business people's confidence will cause recession.

B. Governmental intervention is required in order for an economy to recover from a recession - Incorrect. Not a must be true statement.

C. Employees of businesses that close during a recession make up the majority of the workers who lose their jobs during that recession - Incorrect. Out of scope.

D. Sometimes recovery from a recession does not promptly result in a decrease in the number of people who are jobless - Correct.

E. Workers who lose their jobs during a recession are likely to get equally good jobs when the economy recovers - Incorrect. Out of scope.

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Re: In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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21 Dec 2017, 06:49
anamika4 wrote:
Why not c

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The argument doesn't focus on the employees of the businesses that close during the recession.
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Re: In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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21 Dec 2017, 11:00
Vyshak wrote:
anamika4 wrote:
Why not c

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The argument doesn't focus on the employees of the businesses that close during the recession.

Thanks

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Re: In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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13 May 2018, 00:42
tanzzt wrote:
In a recession, a decrease in consumer spending causes many businesses to lay off workers or even to close. Workers who lose their jobs in a recession usually cannot ﬁnd new jobs. The result is an increase in the number of people who are jobless. Recovery from a recession is deﬁned by an increase in consumer spending and an expansion of business activity that creates a need for additional workers. But businesspeople generally have little confidence in the economy after a recession and therefore delay hiring additional workers as long as possible.

The statements above, if true, provide the most support for which one of the following conclusions?

A. Recessions are usually caused by a decrease in Business people’s conﬁdence in the economy
B. Governmental intervention is required in order for an economy to recover from a recession
C. Employees of businesses that close during a recession make up the majority of the workers who lose their jobs during that recession
D. Sometimes recovery from a recession does not promptly result in a decrease in the number of people who are jobless
E. Workers who lose their jobs during a recession are likely to get equally good jobs when the economy recovers

Premise :- Decrease in consumer spending causes businesses to lay off workers. No of People becoming job less increases. All these happens in a recession.
But when consumer spending starts increasing businesses do not hire workers. There is a delay in hiring additional workers for long period.
Hence it doesn't mean --> whenever no of people who are jobless is increasing, it is due to recession.

a) Business People's confidence. incorrect. It weakens
b) Govt Intervention .....Out of Scope.
c) make up the majority of the workers who lose their jobs during that recession .....No info about this.
d) is Correct
e) are likely to get equally good jobs when the economy recovers ......No such info in the passage.

Ans - D

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Re: In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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15 May 2018, 18:53
Experts souvik101990 mikemcgarry VeritasPrepKarishma GMATNinja

Please guide for this question. I marked Option C as it states that employees of business that close during recession makes up majority of people who lose jobs during recession which supports the fact that recession is causing delay in hiring additional workers
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Re: In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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15 May 2018, 20:14
The correct answer to an inference questions is that which is definitely true and all 'Could be true' answers must be knocked off.
Whereas option C could be true but it doesn't definitely have to be true based on the scope of the argument. Option C says that most of the people who lose jobs are from those businesses which have shutdown. Whereas this can probably be true but is not definitely true.
People who lose jobs during recession = people lose jobs from industries that have shut down + people lose jobs from industries that are still operating during recession.
As per the passage a recession does not necessarily lead to the shutting down of the industries but it does lead to more people losing jobs.
This is the reason why this is probably true but not definitely true.
Whereas option D is something on which you can definitely bet on.As the argument says that after the recovery from recession businesses are not confident of the economy and hence delay hiring. This is what option D says.

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Joined: 03 Feb 2018
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Re: In a recession, a decrease in consumer spending causes many businesses  [#permalink]

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17 Jul 2018, 20:42
Hi Experts,

options B leads to me in an area of doubt. Sometimes can imply to 1 out of 100 also, so in that situation will this statement hold true ?
Re: In a recession, a decrease in consumer spending causes many businesses &nbs [#permalink] 17 Jul 2018, 20:42
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