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In Lacore, an economic crisis resulted in drastic inflation causing 28 Sep 2023, 01:30
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83% (02:03) correct 17% (02:10) wrong based on 103 sessions

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In Lacore, an economic crisis resulted in drastic inflation causing the currency to lose its worth at a rate of almost 5% per day. The CEO of a finance company, in an attempt to salvage as much of the company's capital as possible, devised a plan to purchase computers that would act as assets, the value of which could be returned to the company at a later stage either through usage or by selling them. When the crisis subsided, and the inflation rates returned to a more moderate level, it became evident that the plan had caused the company to lose money.

Which of the following, if true, does the most to explain why the CEO's plan ended up costing the company money?


(A) Although others, having a similar idea to that of the CEO, decided to buy physical assets, not many considered the option of investing in computers.

(B) Lacore's economic crisis was most likely caused by errors committed by major influential authorities in the financial sector such as central banking bodies closely linked to the government.

(C) Although computers may seem vital to the efficient functioning of a company, their direct contribution to production levels is often not as significant as their sheer market value.

(D) Severe periods of inflation, those that are distinguished by increases in a primary price index of 1% to 40% weekly, are almost always the result of an excessive supply of currency.

(E) There are several types of assets that retain either their financial or functional values over long periods of time making them slightly less sensitive to economical dynamics, but computers do not belong to any one of these types.


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In Lacore, an economic crisis resulted in drastic inflation causing 28 Sep 2023, 05:08
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E IMO because it explains both aspects of the plan i.e the value of computers could be returned to the company at a later stage either through usage or by selling them."
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In Lacore, an economic crisis resulted in drastic inflation causing 28 Sep 2023, 17:13
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E) There are several types of assets that retain either their financial or functional values over long periods of time making them slightly less sensitive to economical dynamics, but computers do not belong to any one of these types.

investment in physical asset is useful if it gives adequate returns from sale. E gives the characteristics of a good investment and said computer is not a good investment.Which explained why the investment in computer was a lost.Hence E
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In Lacore, an economic crisis resulted in drastic inflation causing 01 Oct 2023, 13:30
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Bunuel
In Lacore, an economic crisis resulted in drastic inflation causing the currency to lose its worth at a rate of almost 5% per day. The CEO of a finance company, in an attempt to salvage as much of the company's capital as possible, devised a plan to purchase computers that would act as assets, the value of which could be returned to the company at a later stage either through usage or by selling them. When the crisis subsided, and the inflation rates returned to a more moderate level, it became evident that the plan had caused the company to lose money.

Which of the following, if true, does the most to explain why the CEO's plan ended up costing the company money?


(A) Although others, having a similar idea to that of the CEO, decided to buy physical assets, not many considered the option of investing in computers.

(B) Lacore's economic crisis was most likely caused by errors committed by major influential authorities in the financial sector such as central banking bodies closely linked to the government.

(C) Although computers may seem vital to the efficient functioning of a company, their direct contribution to production levels is often not as significant as their sheer market value.

(D) Severe periods of inflation, those that are distinguished by increases in a primary price index of 1% to 40% weekly, are almost always the result of an excessive supply of currency.

(E) There are several types of assets that retain either their financial or functional values over long periods of time making them slightly less sensitive to economical dynamics, but computers do not belong to any one of these types.


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OFFICIAL EXPLANATION



In Lacore, an economic crisis resulted in drastic inflation causing the currency to lose its worth at a rate of almost 5% per day. The CEO of a finance company, in an attempt to salvage as much of the company's capital as possible, devised a plan to purchase computers that would act as assets, the value of which could be returned to the company at a later stage either through usage or by selling them. When the crisis subsided, and the inflation rates returned to a more moderate level, it became evident that the plan had caused the company to lose money.

Which of the following, if true, does the most to explain why the CEO's plan ended up costing the company money?


(A) Although others, having a similar idea to that of the CEO, decided to buy physical assets, not many considered the option of investing in computers.

Incorrect.

This is a Paradox question, so it is made up of premises only; you need to find a new premise which best resolves the apparent discrepancy between the existing premises:

    Premise A: Lacore was suffering inflation rates of 5% per day
    +
    Premise B: a CEO bought computers in the hope that the computers would one day be used or sold
    +
    Premise C: the inflation rates returned to normal, as did the economy
    ✖
    Premise D: the CEO's company lost money because of the plan

    Resolving Premise: ?

This answer choice doesn't really give us a reason for why the plan didn't work. Just because the CEO's idea was fairly original, doesn't mean it f couldn't have been successful.


(B) Lacore's economic crisis was most likely caused by errors committed by major influential authorities in the financial sector such as central banking bodies closely linked to the government.

Incorrect.

This answer choice tries to search for a reason underlying the crisis. However, the argument deals with a specific decision made by a specific CEO. Therefore, background details about what happened to the Lacore economy are irrelevant.



(C) Although computers may seem vital to the efficient functioning of a company, their direct contribution to production levels is often not as significant as their sheer market value.

Incorrect.

This answer choice refers to the difference between the money made from using computers and that made of selling them. However, since the CEO's plan did not specify whether he wanted to sell or use the computers, this cannot help explain its failure.


(D) Severe periods of inflation, those that are distinguished by increases in a primary price index of 1% to 40% weekly, are almost always the result of an excessive supply of currency.

Incorrect.

This answer choice looks into the cause of the inflation. However, since the paradox surrounds the unsuccessful plan of the CEO, the background factors of the economical crises are besides the point.


(E) There are several types of assets that retain either their financial or functional values over long periods of time making them slightly less sensitive to economical dynamics, but computers do not belong to any one of these types.

This answer choice states that computers don't remain useful or valuable over time, thereby resolving the paradox: The CEO bought the computers at inflated prices, and by the time the economic situation was back to normal, they were useless or worthless.
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