In order to improve the long-term savings rate of its citizens,

Here is my 2 cents.

The plan is to improve long term savings. This itself infers that the savings can be improved or there is scope of improvement.

To attract customers, government will give tax rebates on the interest of these savings.

Combining above statements, an assumption can be derived that tax rebates will make customers put money in savings account, increasing the overall savings. We have to attack this assumption.


A. The banks and financial institutions where the special accounts will be held lobbled hard for their introduction. SO will the savings increase? It doesn't answer this question.

B. Nearly all workers in Levaska can already save money in tax-free accounts through their workplace. If workers are already saving money in tax free account, then why will they save in special savings accounts from Government. This weakens the argument as there is no additional benefit other than tax-free account.

C. For the past ten years, Levaskans have been depositing an ever smaller percentage of their income in long-term savings. So will they continue the same trend of saving less? No answer

D. Many Levaskans continue to work beyond the age of sixty-five. Savings are not talked about.

E. In certain circumstances, such as a serious illness, the government plans to waive the penalty on early withdrawals from the special accounts. This can be a possible strengthener

B is the best choice but still a terrible answer. Even if every worker had access to such accounts already, the gov opening up these special savings accounts to all citizens would strengthen their plan to improve saving habits. Drug dealers, criminals, money launderers...all kinds of income likely not covered previously can not be saved tax free. This is not a good question.

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I'm seriously puzzled. How can this question be a part of exam pack 2. I got this question in default exam pack practice exam 2, the free one which comes along with the software. I do have exam pack 2 installed with the software. Is it that the software merged the exam pack 2 in the default one or is this question just repeated over there as has been the case with so many other questions?

Hi Experts,

I had eliminated B because it talks specifically about "workers" and the question is about "citizens".

We do not know if "workers" can represent the entire "citizen" population or it is a mere proportion of "citizens".

How is B the right answer ?

Please clarify !

Hi deepajain90, I had posed me the same question , I can only think that because theoretically the only people that can put aside money are people with jobs, then these would be the citizens using these government introduced savings accounts.

The passage states that a special savings account has been introduced with the aim to increase the long term savings rate of people. Deposit can be upto 3000 $ and there will be no tax levied on the interest that this money earns, unless a person withdraws the money prematurely. Now, this is actually what happens in the real world also. We all know about such saving schemes. But still many of us actually find ourselves unable to save money for our future, isn't it ?

A scenario actually comes to my mind which may actually weaken the good intention behind the scheme. What if, on one hand, the government introduces this saving scheme, but on the other hand, it also plans to increase the tax levied in other areas for people who invest in these schemes, such as raising the tax being levied on the income, or on the consumer goods or grocery items that these people buy. Its possible that the citizen actually now deposits lesser total money in saving schemes. So whatever the tax benefit he gets in this scheme in nullified by the loss he makes by not being able to save more principal money in other normal schemes. In such a situation , the savings in the long run for such people is only going to fall.

Now, this situations is a biased one, but that's all I could think of before proceeding to see the choices :

1) This option choice doesn't seem to have any link with the savings of the people. Even if these specific institutions worked hard , it doesn't mean that the savings made by people will reduce. Only in cases where such institutions say that oh, because we have worked hard, we need to levy a surcharge on our services, which actually happens to be more than the tax saved, would this option become a strong weakener. Incorrect choice.

2) Okay , so the people are in good situation already. So how does this scheme going to make a difference. It might just not be so attractive for people. It seems unlikely that they will invest their money in this account when they already have tried and tested similarly strong schemes to choose from. A possible correct choice.

3) Does a smaller percentage of the income mean smaller saving amount ? Not really . What if the income increased every year in such a way its smaller percent happens to be greater in amount than the year before ? Such a scenario wont actually make the people sway from this scheme. Incorrect choice.

4) Even if people work beyond 65, doesn't mean that they will not invest in this scheme. They still might prefer it. Incorrect choice.

5) If this is the scenario, people would actually prefer the scheme more, is it not ? Then how does this choice become a weakener. It actually only strengthens the position. Incorrect choice.

Correct choice should be B .

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