In the aftermath of a worldwide stock-market crash, Country T claimed

Question

In the aftermath of a worldwide stock-market crash, Country T claimed that the severity of the stock-market crash it experienced resulted from the accelerated process of denationalization many of its industries underwent shortly before the crash.

Which of the following, if it could be carried out, would be most useful in an evaluation of Country T's assessment of the causes of the severity of its stock-market crash?

(A) Calculating the average loss experienced by individual traders in Country T during the crash

(B) Using economic theory to predict the most likely date of the next crash in Country T

(C) Comparing the total number of shares sold during the worst days of the crash in Country T to the total number of shares sold in Country T just prior to the crash.

(D) Comparing the severity of the crash in Country T to the severity of the crash in countries otherwise economically similar to Country T that have not experienced recent denationalization

(E) Comparing the long-term effects of the crash on the purchasing power of the currency of Country T to the immediate, more severe short-term effects of the crash on the purchasing power of the currency of Country T.

ydmuley · Accepted Answer

Let's read the question stem first, Question is asking about - would be most useful in an evaluation of Country T's assessment of the causes of the severity of its stock-market crash? - Which means this is an EVALUATE AN ARGUMENT question

Premise :

1. Worldwide Stock market crash
 2. In aftermath of worldwide stock-market crash - Country T claimed - Severity of the crash was because of - accelerated process of DENATIONALIZATION many of its industries underwent shortly before the crash.

Conclusion :

DENATIONALIZATION  - was the cause of the market crash in country T
 
 As this is a evaluate question, we need to evaluate if Denationalization was the reason for the market crash as claimed by the country T. One of the correct answer choices should give us this option.

(A) Calculating the average loss experienced by individual traders in Country T during the crash 
  - How would calculating loss by an individual trader answer or evaluate denationalization? Moreover name trader is just used to trap people having some financial background knowledge as they see similar terms and apply their studies or perceived knowledge over here, but remember in CR we need to look only for things which are discussed in this argument and deviate from bringing in our knowledge background to answer the questions. Option A is  IRRELEVANT 
 
(B) Using economic theory to predict the most likely date of the next crash in Country T 
  - Again, how would predicting help us to answer the question - Is denationalization the reason for market crash? - Option B is  IRRELEVANT 
 
(C) Comparing the total number of shares sold during the worst days of the crash in Country T to the total number of shares sold in Country T just prior to the crash. 
  - Total number of shares sold is not going to answer our question - Has denationalization caused the market crash?
 
(D) Comparing the severity of the crash in Country T to the severity of the crash in countries otherwise economically similar to Country T that have not experienced recent denationalization
  - Now, comparing the impact of denationalization between two countries can give us a fair idea of whether denationalization can be the reason for stock-market crash as claimed by the country T - This looks a possible answer, lets check the last remaining answer choice - Option D is the CORRECT answer
 
(E) Comparing the long-term effects of the crash on the purchasing power of the currency of Country T to the immediate, more severe short-term effects of the crash on the purchasing power of the currency of Country T.
  - This option is talking more about the possible steps to be taken post market crash but nowhere talk about the denationalization of companies - Hence, this option is  OUT OF SCOPE

Hence, D is the correct answer

KarishmaB · Answer

There was a worldwide stock market crash.
Country T experienced a severe crash.
Country T claims it is because of the accelerated process of denationalization many of its industries underwent shortly before the crash

What would be useful to evaluate Country T's assessment of the causes of the severity of its stock-market crash?
What would be useful to evaluate whether the denationalization (this is country T's assessment) was the cause of severe crash?

(A) Calculating the average loss experienced by individual traders in Country T during the crash

We already know the crash was severe. Avg loss of traders doesn't give us the reason of the severe crash.

(B) Using economic theory to predict the most likely date of the next crash in Country T

Irrelevant

(C) Comparing the total number of shares sold during the worst days of the crash in Country T to the total number of shares sold in Country T just prior to the crash.

Number of shares sold alone do not tell us anything. We need to know the number of shares bought, the price levels etc too. In any case, even if we have all that information, it will probably tell us how severe the crash was, not the reason for the crash. It will not tell us whether denationalisation was the reason for the severe crash.

(D) Comparing the severity of the crash in Country T to the severity of the crash in countries otherwise economically similar to Country T that have not experienced recent denationalization

Correct. So comparing T to other countries with similar economic situation but without denationalisation will tell us whether the severe crash of country T was because of denationalisation. If other countries with denationalisation but with similar economies have not seen severe crash, then it is likely that country T's severe crash is because of denationalisation. If other countries without denationalisation have also seen a sever crash, then some other factor seems to be likely.

(E) Comparing the long-term effects of the crash on the purchasing power of the currency of Country T to the immediate, more severe short-term effects of the crash on the purchasing power of the currency of Country T.

Effects of the crash are irrelevant. We need the reasons of the severe crash.

Answer (D)

Pulkitv · Answer

Hi

I marked B here for the reason that if the country can identify the date of its next crash, it has identified the reasons for the crash successfully.
Whereas D only tells us to compare the severity of the countries.

Kindly explain.

Nightmare007 · Answer

Nice question fell for C. The number of shares won't matter, but the severity does. So answer should be D

push12345 · Answer

D is best answer
As one needs to consider whether denationalisation has any impact on crash or not
So need to coNSider the cases where denationalisation has not occurred.

Posted from my mobile device

rish2708 · Answer

If any expert can help out,

This question shows us that the decentralization caused the crash

When we look at the answer, can we say that the cause is strengthened when:
 i) When cause did not exist event did not happen
 ii) Some other cause did not lead to the event
  iii) A similar correlation existed ( this is the reasoning used here)

Do we see a point here or I am wrong with my theory? Please help

Regards,
Rishav

saby1410 · Answer

VeritasKarishma   GMATNinja 
  ChiranjeevSingh 
Can you explain why option C is incorrect?
Can't we say if our stocks sold before and after denationalisation same so it doesn't affected and if there was change during the same time so it have affected? what's wrong in reasoning?

Saharsh95 · Answer

Can identifying the reasons for a phenomenon lead to predicting the date of the phenomenon? Think about it. If a certain event has been observed to happen every 15 days, without any gap or delay in the past, then we can still predict with greater accuracy that it will happen again in the next 15 days (by only using the past data as a pattern to predict the date of the next event--> notice the word "economic theory"). So you see, even without studying the reasons of the event, the prediction is possible (thus B is rejected).

On the other hand, if two countries are similar in terms of their economies and both of them suffered the crash, then we can check if denationalization was a factor in Country T or not. If the amount of severity suffered by other countries without denationalization was more that Country T, that means there was another factor (and not denationalization) that caused the crash to be severe. However, if the other countries suffered a significantly less severe crash, we can conclude that denationalization was the factor that caused the stock crash to be "more severe". Hence, option D.

CEdward · Answer

Is it just me or does D make the assumption that the cause of the crash was denationalization? What if denationalization had nothing to do with the crash?

mSKR · Answer

That's what we need to evaluate.
yes denationalization was the cause: Then only T country is severely impacted, other countries of similar economy may not have high impact
No, Denationalization was not the cause: Then both countries of similar economy should have similar impact.

We get different response, one strengthening and another weakening, with Yes and NO , hence D is correct answer.

ankur2510 · Answer

Hello Experts,

I have some confusion with respect to the right answer and what is asked in the argument. Its been asked:
Which of the following, if it could be carried out, would be most useful in an evaluation of Country T's assessment of the  causes  of the severity of its stock-market crash?

(C) Comparing the total number of shares sold during the worst days of the crash in Country T to the total number of shares sold in Country T just prior to the crash. -  Kind of gives the cause and from cause --> severity

(D) Comparing the severity of the crash in Country T to the severity of the crash in countries otherwise economically similar to Country T that have not experienced recent denationalization :  this does gives us something to analyze but then comparing with other country? (Even though I choose this as my best option, but then there was this confusion because of the "cause")

Can anyone pls help

a123bansal · Answer

Hello ma'am  KarishmaB

Seems like some typo error in D option clarification. Can you please check?

What you have written: If other countries with denationalisation but with similar economies have not seen severe crash, then it is likely that country T's severe crash is because of denationalisation.

What it is as per me: If other countries with denationalisation but with similar economies have not seen severe crash, then it is likely that country T's severe crash is NOT because of denationalisation.

Sorry, if my understanding is wrong.

Thank You

KarishmaB · Answer

There is a typo but it is this: If other countries withOUT denationalisation ...
We are comparing with other countries that did not undergo denationalisation in this option. If those countries did not see a severe crash, then country T's severe crash could have been because of denationalisation. Countries without denationalisation did not see a severe crash but country T did. Country T's severe crash could be because of denationalisation.

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In the aftermath of a worldwide stock-market crash, Country T claimed

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