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Updated on: 07 Sep 2020, 06:05
Originally posted by Mayankcadbury on 07 Sep 2020, 05:59.
Last edited by Bunuel on 07 Sep 2020, 06:05, edited 1 time in total.
Last edited by Bunuel on 07 Sep 2020, 06:05, edited 1 time in total.
Renamed the topic and edited the question.
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
64% (01:52) correct
36%
(01:58)
wrong
based on 943
sessions
History
Date
Time
Result
Not Attempted Yet
Large increases in government spending cause a net decrease in jobs over time. Thus, as the government spends more money in the next decade, the unemployment rate will rise. Such a rise will cause interest rates to increase as well; as a result, corporate profits will almost certainly decline over the next decade.
Which of the following is an assumption required by the argument’s conclusion?
A) Increases in corporate profits from product innovation will not be large enough to offset the negative effect of increased interest rates.
B) Government policy makers will not become more aware of the steps they can take to reduce wasteful healthcare programs run by the government.
C) Increased interest rates similarly affect all small and large businesses.
D) Some economists predict a greater than 1.5 percent rise in the unemployment rate during the next 15 years.
E) The government is the sole cause of rising unemployment.
Which of the following is an assumption required by the argument’s conclusion?
A) Increases in corporate profits from product innovation will not be large enough to offset the negative effect of increased interest rates.
B) Government policy makers will not become more aware of the steps they can take to reduce wasteful healthcare programs run by the government.
C) Increased interest rates similarly affect all small and large businesses.
D) Some economists predict a greater than 1.5 percent rise in the unemployment rate during the next 15 years.
E) The government is the sole cause of rising unemployment.
21 Sep 2020, 15:56
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In the interest of helping the community, since I see that no other Expert has weighed in yet, I will offer my thoughts on each option. In any assumption question, you have to look for a crucial link that connects A to C. Without that link, a gap always exists. Since this question asks specifically about an assumption required by the argument's conclusion, we must first be able to put a finger on that conclusion. What does the passage have in store for us?
increase government spending → decrease number of jobs (increase unemployment) → increase interest rates → decrease corporate profits
Since the question asks about a necessary assumption in the conclusion, we need to ask ourselves how corporate profits suddenly entered the picture. The correct answer should provide that link.
Increases in corporate profits... will be large enough to offset the negative effect of increased interest rates.
If that were true, the conclusion would not hold, period, so we have found a required assumption. The problem is, this answer choice offers too much information, and we need not be able to tell whether the profits come from product innovation or any other stream, as long as the bottom line presents a certain picture. I would yellow-light this answer and move on to look for more obvious outliers.
Since (A) is the best of the lot, the hardest to argue against, I would feel comfortable flipping the switch to green instead. I simply cannot get behind any other answer, and that is what guides my hand more than knowing what the correct answer must be. Do I think that this question would appear as is on the GMAT™? No. That highlighted part of (A) is not something that would slip through the cracks and make its way onto the test. But that does not mean we cannot learn anything from the question. If I had to rate it on a scale of 1-10, I would give it a 7. The language is close enough to what might appear on the GMAT™, and answer choices generally conform to the types that appear therein.
I hope that helps. If anyone has further questions or concerns, I would be happy to address them. Good luck with your studies.
- Andrew
Mayankcadbury
Interesting. There are actually two conclusions here, each of which is ushered in by a transition (thus and as a result). Sentence 1 outlines an inverse correlation between government spending and the number of jobs held or available: a large increase in such spending leads to a decrease in jobs in the long run. Sentence 2 provides the first conclusion, more or less following the script of the first line while forecasting what will develop over the next decade: the government will spend more, and unemployment will rise. Sentence 3 extends the effect of the previous line. We understand that rising unemployment will see a concurrent increase in interest rates, and the latter half of the sentence provides the final conclusion of the passage: the chain of events outlined earlier will almost certainly lead to a decline in corporate profits over the next decade. We can sum up the domino effect thus:
increase government spending → decrease number of jobs (increase unemployment) → increase interest rates → decrease corporate profits
Since the question asks about a necessary assumption in the conclusion, we need to ask ourselves how corporate profits suddenly entered the picture. The correct answer should provide that link.
Mayankcadbury
Leave out the highlighted part, and this answer looks perfect. If you prefer the negation technique for assumption questions, look at what happens when you remove the not:
Increases in corporate profits... will be large enough to offset the negative effect of increased interest rates.
If that were true, the conclusion would not hold, period, so we have found a required assumption. The problem is, this answer choice offers too much information, and we need not be able to tell whether the profits come from product innovation or any other stream, as long as the bottom line presents a certain picture. I would yellow-light this answer and move on to look for more obvious outliers.
Mayankcadbury
We are not interested in the level of awareness policy makers may or may not have in the next decade. If you negate this answer choice by removing the not, you are left with a nagging so what that has no satisfactory answer. Simply put, there is no direct correlation between such awareness and the predicted decline in corporate profits. As such, this cannot be a required assumption. I will admit to being taken aback by the mention of wasteful healthcare programs as well, but if we gave product innovation a free pass above, I see no reason we could not do the same here. On the whole, though, we have no compelling reason to choose this answer, and it is the former concern that pushes this one out of contention.
Mayankcadbury
Extreme, overreaching language is a hallmark of incorrect answers, and this one proves no exception. Why would the effect (note the "e-" since we are talking about an outcome) of increased interest rates have to be the same for all businesses under the sun? A decrease in corporate profits is enough, not necessarily a similar decrease for each and every business.
Mayankcadbury
This is as off-topic as a required assumption could possibly be. Do we really need to invoke some economists to bridge the gap to the conclusion? What about some in general? Is there no consensus on this prediction? If not, then what bearing would it have on the conclusion? Maybe some other economists got it right instead. Furthermore, why does the rise in the unemployment rate need to be greater than 1.5 percent? This answer is easy to see off.
Mayankcadbury
Notice the absolute language again. It is just as wrong as before. We are not interested in the exclusive cause of rising unemployment, not to mention that the conclusion of the passage ties into a decline in corporate profits. This answer shifts the focus to the intermediate conclusion instead. I cannot say that that in and of itself disqualifies this answer choice, but it does not help. Even if we choose to focus on the intermediate conclusion, we are not required to assume that the government and the government only is the cause of rising unemployment. The conclusion could be just as valid if the government shared that burden with some other (unmentioned) entity.
Since (A) is the best of the lot, the hardest to argue against, I would feel comfortable flipping the switch to green instead. I simply cannot get behind any other answer, and that is what guides my hand more than knowing what the correct answer must be. Do I think that this question would appear as is on the GMAT™? No. That highlighted part of (A) is not something that would slip through the cracks and make its way onto the test. But that does not mean we cannot learn anything from the question. If I had to rate it on a scale of 1-10, I would give it a 7. The language is close enough to what might appear on the GMAT™, and answer choices generally conform to the types that appear therein.
I hope that helps. If anyone has further questions or concerns, I would be happy to address them. Good luck with your studies.
- Andrew
General Discussion
08 Sep 2020, 10:17
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