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# Last year the rate of inflation was 1.2%, but for the

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Last year the rate of inflation was 1.2%, but for the [#permalink]

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10 Apr 2005, 03:47
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Last year the rate of inflation was 1.2%, but for the current year, it has been 4%. We can conclude that inflation is on an upward trend and the rate will be still higher next year.

Which of the following, if true, most seriously weakens the conclusion above?

A: The inflation figures were computed on the basis of a representative sample of economic data rather than all of the available data.
B: Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4%.
C: Increases in the pay of some workers are tied to the level of inflation, and at an inflation rate of 4% or above, these pay raises constitute a force causing further inflation.
D: The 1.2% rate of inflation last year represented a ten-year low.
E: Government intervention cannot affect the rate of inflation to any significant degree.
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10 Apr 2005, 06:05
I will go with 'D'

Conclusion: Inflation is on an upward trend and the rate will be still higher next year.

A: The inflation figures were computed on the basis of a representative sample of economic data rather than all of the available data.
Initial thought this could be it but I feel D to be more stronger and moreover I think that it is computed by sampling - I am may be way off.

B: Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4%.
Nothing to do with the conclusion.

C: Increases in the pay of some workers are tied to the level of inflation, and at an inflation rate of 4% or above, these pay raises constitute a force causing further inflation.
Nothing to do with the conclusion.

D: The 1.2% rate of inflation last year represented a ten-year low.
This is it. It may be that the inflation is usually at 4% and just last year it dipped to a new low and this year it has come back to its original level, so this does not mean that it is going to increase next year.

E: Government intervention cannot affect the rate of inflation to any significant degree.
Nothing to do with the conclusion.

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10 Apr 2005, 07:47
[quote="Taku"]Last year the rate of inflation was 1.2%, but for the current year, it has been 4%. We can conclude that inflation is on an upward trend and the rate will be still higher next year.

Which of the following, if true, most seriously weakens the conclusion above?

A: The inflation figures were computed on the basis of a representative sample of economic data rather than all of the available data.
B: Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4%.
C: Increases in the pay of some workers are tied to the level of inflation, and at an inflation rate of 4% or above, these pay raises constitute a force causing further inflation.
D: The 1.2% rate of inflation last year represented a ten-year low.
E: Government intervention cannot affect the rate of inflation to any significant degree.[/quote]

I choose B, because it tells us that inflation dipped down last year because of a specific reason (oil prices), and that the figure is usually at 4% (which would be consistent with this years prices). If inflation normally sits at 4%, then there is nothing signaling an upward trend (and therefore, nothing that signals inflation will increase in the next year).

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11 Apr 2005, 00:26
A: The inflation figures were computed on the basis of a representative sample of economic data rather than all of the available data.
- Not important.

B: Last year a dip in oil prices brought inflation temporarily below its recent stable annual level of 4%.
- Suggests 4% is the norm, and last year it went down only because the oil prices dipped.

C: Increases in the pay of some workers are tied to the level of inflation, and at an inflation rate of 4% or above, these pay raises constitute a force causing further inflation.
- Out of scope

D: The 1.2% rate of inflation last year represented a ten-year low.
- Suggest 1.2% was merely a blip in normal trend. But it could still be rising, just that 1.2% is the lowest.

E: Government intervention cannot affect the rate of inflation to any significant degree.
- Out of scope

B it is.

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11 Apr 2005, 05:32
B and D both look like good candidates, but i lean more towards B

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11 Apr 2005, 05:44
Hello folks who picked up (B),
What do you think of (D)? Do you think (D) doesn't weaken the argument or does weaken it but has less suitable than (B)? Thank you.
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11 Apr 2005, 06:02
Taku wrote:
Hello folks who picked up (B),
What do you think of (D)? Do you think (D) doesn't weaken the argument or does weaken it but has less suitable than (B)? Thank you.

D doesn't weaken the argument, but neither does it strengthen it. By saying it's a 10 yr low means nothing. The inflation rate could still be rising, just that it's not as low as 1.2%.

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11 Apr 2005, 06:21
The more I look at this the more I am leaning towards 'B' but isn't 'D' telling us that 1.2% cannot be used to judge because it is an extreme case.

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11 Apr 2005, 06:24
The reason why 1.2% is the lowest in 10 yrs is because it's not good enough to say the rate isn't fallling or rising.

E.g.

10 yrs ago 1.3%
9 yrs ago 1.4%
8 yr ago 1.6%
7 yrs ago 1.7%
6 yrs ago 1.8%
5 yrs ago 1.9%
4 yrs ago 2.0%
3 yrs ago 1.7%
2 yrs ago 1.5%
1 yrs ago 1.2% <-- lowest in 10 yrs
Today 1.5%

Who's to say the rate won't go up or down after today?

But B is different. It's saying that the rate is always 4% apart from the drop last year, and that was caused by falling oil prices. So unless there's another drop in oil price, we should expect the inflation rate to stay at 4%

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11 Apr 2005, 11:32
ywilfred, Thanks for your time. I am convinced as to why it can't be 'D'.

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11 Apr 2005, 12:56
it should be B. Unless it is B, then any rise of the inflation rate from 1.8 to 4.0% will certainly strengthen the argument. ONly by indicating the the 1.8% is an exception can the argument be weaken.

by the way, I have seen this question before in either OG or PR materials. Taku. where did you get this?

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12 Apr 2005, 05:54
The OA is (B).

As rthothad did, I also picked up (D), but came to understand that (B) is the best answer from the discussions here.

Thanks rthothad, halahpeno, banerjee_98, vikky267, ywilfred, Folaa3 & patrickpui!! Good discussions!!

patrickpui > it is from OG.
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12 Apr 2005, 05:54
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# Last year the rate of inflation was 1.2%, but for the

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