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

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In order to improve the long-term savings rate of its citizens,  [#permalink]

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New post 15 Jul 2016, 11:45
6
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A
B
C
D
E

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  15% (low)

Question Stats:

81% (01:31) correct 19% (01:41) wrong based on 339 sessions

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In order to improve the long-term savings rate of its citizens, Levaska’s government has decided to introduce special savings accounts, Citizens can save up to $3,000 a year in special accounts without having to pay tax on the interest, unless they withdraw money from the account before they reach the age of sixty-five. If they do withdraw any money before that age, they have to pay tax on the accumulated interest and a penalty.

Which of the following, if true, most seriously threatens the success of the government’s plan?

A. The banks and financial institutions where the special accounts will be held lobbled hard for their introduction.
B. Nearly all workers in Levaska can already save money in tax-free accounts through their workplace.
C. For the past ten years, Levaskans have been depositing an ever smaller percentage of their income in long-term savings.
D. Many Levaskans continue to work beyond the age of sixty-five.
E. In certain circumstances, such as a serious illness, the government plans to waive the penalty on early withdrawals from the special accounts.

Could anyone please help me in how B is suffice, as it just considers only workers but the answer should address all citizens
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In order to improve the long-term savings rate of its citizens,  [#permalink]

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New post 15 Jul 2016, 12:20
2
A. The banks and financial institutions where the special accounts will be held lobbled hard for their introduction. - Incorrect. Can't deduce the effect of this option on the success of the government plan.

B. Nearly all workers in Levaska can already save money in tax-free accounts through their workplace. - Correct. If most of the workers are already able to save through their workplace, only few workers will opt for the government plan, hampering the plan's success.

C. For the past ten years, Levaskans have been depositing an ever smaller percentage of their income in long-term savings. - Incorrect. Irrelevant. Relationship between the plan's success and performance of deposits in the past 10 years cannot be established.

D. Many Levaskans continue to work beyond the age of sixty-five. - Incorrect - Irrelevant

E. In certain circumstances, such as a serious illness, the government plans to waive the penalty on early withdrawals from the special accounts. - Incorrect. Out of context

Answer: B

PS: Its important to choose the best option from the given options. Option B weakens the government's plan even though the option uses the word 'workers' instead of 'citizens'.

Almost similar question from GMAT Prep but with a different answer
:): five-years-ago-as-part-of-a-plan-to-encourage-citizens-of-63930.html
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In order to improve the long-term savings rate of its citizens,  [#permalink]

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New post 15 Jul 2016, 15:12
1
In order to improve the long-term savings rate of its citizens, Levaska’s government has decided to introduce special savings accounts, Citizens can save up to $3,000 a year in special accounts without having to pay tax on the interest, unless they withdraw money from the account before they reach the age of sixty-five. If they do withdraw any money before that age, they have to pay tax on the accumulated interest and a penalty.

Which of the following, if true, most seriously threatens the success of the government’s plan?


Solution: Any point that would show that people would not be putting money in govt. savings account would be the correct answer. It is sufficient to show that 4 options are incorrect rather than validating the correct option's correctness fully.

A. The banks and financial institutions where the special accounts will be held lobbied hard for their introduction. ---> IRRELEVANT. Doesn't affects argument in any way.
B. Nearly all workers in Levaska can already save money in tax-free accounts through their workplace. ---> Correct. If the people already have an existing facility to put money, why would they choose govt accounts?
C. For the past ten years, Levaskans have been depositing an ever smaller percentage of their income in long-term savings. ---> Incorrect. Since people can save 'up to' $3000, it doesn't matters if they save $1 or $3000 per year.
D. Many Levaskans continue to work beyond the age of sixty-five. --> IRRELEVANT. Doesn't affects argument in any way.
E. In certain circumstances, such as a serious illness, the government plans to waive the penalty on early withdrawals from the special accounts. --> Incorrect. Is a strengthener in fact because it gives people incentive to put money in govt. account.


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Re: In order to improve the long-term savings rate of its citizens,  [#permalink]

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New post 15 Jul 2016, 15:18
1
babuvgmat wrote:
In order to improve the long-term savings rate of its citizens, Levaska’s government has decided to introduce special savings accounts, Citizens can save up to $3,000 a year in special accounts without having to pay tax on the interest, unless they withdraw money from the account before they reach the age of sixty-five. If they do withdraw any money before that age, they have to pay tax on the accumulated interest and a penalty.

Which of the following, if true, most seriously threatens the success of the government’s plan?

A. The banks and financial institutions where the special accounts will be held lobbled hard for their introduction.
B. Nearly all workers in Levaska can already save money in tax-free accounts through their workplace.
C. For the past ten years, Levaskans have been depositing an ever smaller percentage of their income in long-term savings.
D. Many Levaskans continue to work beyond the age of sixty-five.
E. In certain circumstances, such as a serious illness, the government plans to waive the penalty on early withdrawals from the special accounts.

Could anyone please help me in how B is suffice, as it just considers only workers but the answer should address all 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

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Re: In order to improve the long-term savings rate of its citizens,  [#permalink]

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New post 15 Jul 2016, 16:15
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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Re: In order to improve the long-term savings rate of its citizens,  [#permalink]

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New post 03 Sep 2016, 13:22
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?
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Re: In order to improve the long-term savings rate of its citizens,  [#permalink]

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New post 18 Sep 2018, 08:22
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

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Re: In order to improve the long-term savings rate of its citizens, &nbs [#permalink] 18 Sep 2018, 08:22
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