Lawmaker: Raising taxes is not the only means of reducing

Question

Lawmaker: Raising taxes is not the only means of reducing government debt. The government’s stockpile of helium is worth 25 percent more, at current market prices, than the debt accumulated in acquiring and storing it. Therefore, by selling the helium, the government can not only pay off that debt but reduce its overall debt as well.

Which of the following is an assumption on which the argument depends?

A. The government has no current need for helium.
B. Twenty-five percent of the debt the government has accumulated in Stockpiling helium is not an insignificant portion of the government’s Total debt.
C. It is not in the lawmaker’s interest to advocate raising taxes as a Means of reducing government debt.
D. Attempts to sell the government’s helium will not depress the market Price of helium by more than 25 percent.
E. The government will not incur any costs in closing its facilities for stockpiling helium.

abhimahna · Accepted Answer

Notice, conclusion is that selling helium will reduce the overall debt of the government.

In B, we are given that 25% of the total debt the government has accumulated in Stockpiling helium is not an insignificant portion.

Negate it, 25% of the total debt the government has accumulated in Stockpiling helium is an insignificant portion. So, what is insignificant here?? Is it 1% or 30% or what? We don't know. May be its 30%. So, selling it may reduce that 30% amount. We are no where given the conclusion that the larger portion of the overall debt is reduced. So, whether its insignificant or significant, the debt is obviously going to reduce. hence, this statement doesn't shatter the conclusion. Hence, incorrect.

Now, option D : Attempts to sell the government’s helium will not depress the market Price of helium by more than 25 percent.

Negate it : Attempts to sell the government’s helium will depress the market Price of helium by more than 25 percent. Now, since we are saying that the market price will be reduced by more than 25%, so it casts doubt whether we will be able to pay the debt. We are given that it is currently at 25% higher than its actual price. So, if the price is reduced by 25%, we may actually get the lower amount of money that would lead to not able to pay the helium price as well. Hence, the conclusion is shattered.

lets say Helium bought at 100, Current price = 125, after selling reduced price = 93.75, which is less than the original price. I hope its clear now.

shalva · Answer

Main conclusion of the argument says that helium can be sold to pay off the government debt (well some part of it).

Let's assume that government does in fact have some urgent need of helium. Does this fact change anything? You can still sell the helium and pay off the debt (as long as market price are high enough). The conclusion still holds.

The crucial assumption argument depends on concerns market prices. If prices decrease by more than 25%, there will be no more money left to pay off public debt.

So IMO it should be (D)

BarneyStinson · Answer

A is simple and straight-forward. What is wrong with it? Why can't it be the correct answer?

nishant12600 · Answer

I m confused between B and D, need expert opinion.
 sayantanc2k  please help

sayantanc2k · Answer

In addition to the explanation by  abhimahna  above, please note that an assumption MUST BE TRUE. Whenever a specific number or percentage is observed in an option of an assumption question, there are chances that by changing the number or percentage the implication of the option does not change. Hence assumption of  that particular number or percentage  need not necessarily be required. Such options can then be easily eliminated. Here instead of 25% mentioned in option B take any other larger percentage - the implication does not change. So the assumption of that specific 25% is not required. Without further analysis this option can be dropped.

KarishmaB · Answer

Premises  : 
Raising taxes is not the only means of reducing government debt
Government’s stockpile of helium is worth 25 percent more, at current market prices, than the debt accumulated in acquiring and storing it.

Conclusion  :
By selling the helium, the government can not only pay off that debt but reduce its overall debt as well.

Let's say when the Govt acquired and stored the helium, it incurred a debt of $100. Now the value of that helium is $125.
So the conclusion says that if you sell the helium, you can pay off the $100 debt AND you can further pay off $25 of the Govt debt.

A. The government has no current need for helium.

We need to worry only about how selling off helium will impact the current debt level of the Govt. Whether selling off helium is ok from other angles is not relevant to our argument.

B. Twenty-five percent of the debt the government has accumulated in Stockpiling helium is not an insignificant portion of the government’s Total debt.

The figure of 25% given here is just to confuse you. It has no relevance and no connection to the 25% increase in value of helium. The option could very well have been "the debt the government has accumulated in Stockpiling helium is not an insignificant portion of the government’s Total debt". It doesn't matter whether this debt is a small or big part of the overall debt. The conclusion only says that "this debt" can be taken care of and its overall debt can be reduced. That will be true irrespective of the relative size of this debt.

C. It is not in the lawmaker’s interest to advocate raising taxes as a Means of reducing government debt.

The lawmaker's interest is irrelevant.

D. Attempts to sell the government’s helium will not depress the market Price of helium by more than 25 percent.

The impact of selling helium on Govt's debt is based on the current price of helium. If the current price of helium depresses because of too much helium supply in the market, it may not sell at the current price. If the reduction in price is more than the "25% that it was extra", selling off helium may not be able to take care of "this debt". 
This is a valid assumption.

E. The government will not incur any costs in closing its facilities for stockpiling helium.

The costs incurred in closing facilities are irrelevant. We just need to worry about what we will get when we sell the helium.

Answer (D)

KarishmaB · Answer

No, option (B) is not against what is mentioned in the argument.

The argument tells us that the helium's current market price is 25% more than the debt incurred in buying and storing it. 
Option (B) says that 25% of the debt incurred in buying and storing helium is a significant amount, a relatively big amount. So it will bring down the debt by a significant amount if helium is sold. This is additional info. But it is not an assumption and hence not the answer. 
Whether the decrease in debt is a big amount or a small amount, it doesn't matter to our argument. The fact remains that the debt will come down.

ktzsikka · Answer

VeritasKarishma I understand why option D is correct but I am unable to eliminate option E (even by negation) What if the costs incurred in closing the facilities are more than the 25% profit that the govt. will earn on selling the stockpiled Helium? In that case, it becomes essential to know that government will not incur any costs in closing its facilities for stockpiling helium. Please help! Thanks in advance.

KarishmaB · Answer

We are told that currently the Govt is incurring costs for storing helium. If we sell it, we will be able to eliminate the acquisition & storage cost debts and some more. 
What we do with the premises where we currently store helium is irrelevant. It is beyond the scope of our argument. It is not discussed. Perhaps something else will be stored there. Perhaps it will be closed down. Perhaps it will be torn down and a residential complex will be made in its place. We don't know.
The point is that we don't need to assume what might happen to it and what may the cost of that be. It is out of scope for us. The argument does not discuss it.

KarishmaB · Answer

Also, note that even if it were relevant and you did negate it, you would get:

Negated E. The government will incur some cost in closing its facilities for stockpiling helium.

What that cost is, we don't know. It may be very little. Our conclusion can still stand. We could still wipe out acquisition and storage debt and some more. 
We do not need to assume that there will be no costs associated with it. Hence, even then, (E) would not be an assumption.

Nipunh · Answer

KarishmaB   MartyMurray   GMATNinja  I have the same reasoning, please help. this is the reason why I eliminated it because it looks like it is a can be true, and doesnt have to be a must be true.... if we say 25% being refered here is actually only the 25% extra (which by the language of it, I am unable to bridge the gap).. then it will make sense... but I thought about it in the same manner as  moonriver0523  did. hence, I went with A, even though it was extreme...

KarishmaB · Answer

Negation of (D):  Attempts to sell the government’s helium WILL depress the market Price of helium by more than 25 percent.

If cost of acquiring and storing is say $100 (debt), the current price is $125.

The argument says that govt should sell it at $125 and remove its debt and then some.
 
What if helium's price reduces by more than 25% of $125? Then helium's price will become $93.75 and it won't even take care of helium debt. It is likely that when the option says 25%, it means the extra price of $25 only and hence the assumption is that helium's price will not go below $100 because that means debt will not be completely wiped off, but even if we take it as 25% of market price, that is certainly an assumption too. The argument is assuming that price of helium will not reduce by more than 20%, so certainly it is assuming that it will not reduce by more than 25% too.

SolomiiaF · Answer

A.  The government has no current need for helium.

If they had needed it, they would have used it instead of storing it.

D.  Attempts to sell the government’s helium will not depress the market Price of helium by more than 25 percent.

If the supply depresses the prices by 25%, the government will not be able to cover the debt for acquiring and storing helium.

E.  The government will not incur any costs in closing its facilities for stockpiling helium.

Even if they incur some costs for closing facilities, they could have covered it by the profit they earn from selling helium, and would still be able to reduce the overall cost

gauravgk13 · Answer

KarishmaB

But in option D, the price of Helium will be affected after the selling has been done by the govt., how does it impact the amount govt. gets by selling the Helium and thus reducing overall debt ?

KarishmaB · Answer

Look at option (D):   Attempts to sell    the government’s helium will not depress the market Price of helium by more than 25 percent.

The option does not say "Selling the helium will not depress ..." It says "attempts to sell..."

When we talk of selling a govt's stockpile, we are talking about huge amounts. They cannot be sold in the open market in an instant. They are sold piecemeal and take time. When such a big sell order comes to the market, the price of the item is expected to reduce because the supply increases a lot.

guddo · Answer

Lawmaker: Raising taxes is not the only means of reducing government debt. The government’s stockpile of helium is worth 25 percent more, at current market prices, than the debt accumulated in acquiring and storing it. Therefore, by selling the helium, the government can not only pay off that debt but reduce its overall debt as well. 
 
Which of the following is an assumption on which the argument depends?

The argument assumes that the government can actually sell the helium for enough money to get the stated surplus. But if selling a huge stockpile floods the market and lowers the price of helium too much, the government may not receive enough money to pay off the helium-related debt and still have money left over.  So the argument needs the assumption that selling the helium will not destroy the expected value of the stockpile .

A. The government has no current need for helium.

This is not required. Even if the government needs some helium, the argument is about whether selling the stockpile could reduce debt.

B. Twenty-five percent of the debt the government has accumulated in stockpiling helium is not an insignificant portion of the government’s total debt.

This is not required. Even a small surplus could still reduce overall debt.

C. It is not in the lawmaker’s interest to advocate raising taxes as a means of reducing government debt.

This is irrelevant. The lawmaker’s personal interest does not affect whether the helium sale would reduce debt.

D. Attempts to sell the government’s helium will not depress the market price of helium by more than 25 percent.

This is correct. If selling the helium caused the market price to fall too much, the government might not receive enough money to both pay off the helium-related debt and reduce overall debt.

E. The government will not incur any costs in closing its facilities for stockpiling helium.

This is too strong. The argument does not require zero closing costs; it only requires that any costs not wipe out the surplus from the sale.

Answer: (D)

Usernamevisible · Answer

1. PRETHINK (MOST IMPORTANT)
 Argument Core

* Helium is worth 25% more than the debt incurred to acquire/store it.
* Sell helium → pay off helium-related debt → reduce overall government debt.
 Gap
 The lawmaker assumes the government can actually realize that 25% surplus when it sells.
 High-Value Prethink
 Before looking at choices, a 725+ scorer would think:

1. Selling such a large helium stockpile will not significantly reduce helium prices.
2. The sale proceeds will be at least greater than the debt tied to the helium.
3. Transaction/closure costs will not wipe out the surplus.
4. The government is legally and practically able to sell the helium.
 Notice something important:
 The conclusion depends on the government actually receiving more money than the helium debt.
 So the biggest danger is:
 "What if selling all that helium causes the market price to crash?"
 That is the most obvious attack.

---

2. OPTION ANALYSIS
 A. The government has no current need for helium.
 Why wrong
 The argument is about debt reduction.
 Even if the government needs helium, it could still sell it and reduce debt.
 The conclusion is:
 Selling helium would reduce debt.
 Not:
 Selling helium is a wise policy.
 Need and debt reduction are different issues.
 Elimination clue
 Introduces a policy consideration rather than a logical requirement for the financial calculation.

---

B. Twenty-five percent of the debt the government has accumulated in stockpiling helium is not an insignificant portion of the government’s total debt.
Why wrong
The conclusion says:
reduce its overall debt
Even a tiny reduction is still a reduction.
Suppose total government debt is $10 trillion and helium sale reduces debt by only $1 million.
The conclusion remains true.
The argument never claims the reduction is substantial.
Elimination clue
Confuses "reduce debt" with "reduce debt significantly."
Magnitude is irrelevant.
------------------------

C. It is not in the lawmaker’s interest to advocate raising taxes as a means of reducing government debt.
Why wrong
Purely about the lawmaker's motives.
Arguments depend on evidence and logic, not speaker incentives.
Even if the lawmaker personally benefits from avoiding tax increases, the helium sale could still reduce debt.
Classic motive fallacy trap.
Elimination clue
Whenever an assumption choice discusses the speaker's personal interests rather than the causal chain, eliminate aggressively.
------------------------------------------------------------------------------------------------------------------------------

D. Attempts to sell the government’s helium will not depress the market price of helium by more than 25 percent.
Correct
Current market value of helium stockpile:
125% of helium-related debt.
The surplus is only 25%.
If flooding the market causes prices to fall by more than 25%, then:

* helium sale proceeds may become less than the debt
* government may not fully pay off the helium debt
* therefore may not reduce overall debt
 Example:
 Debt = $100
 Current helium value = $125
 Price falls 30%
 Sale proceeds = $87.50
 Now debt cannot even be fully repaid.
 The conclusion collapses.
 This directly protects the key gap:
 the government can actually realize the claimed surplus when selling.
 Negation Test
 Attempts to sell the helium depress the market price by more than 25%.
 Now the sale may not generate enough money to exceed the debt.
 Conclusion no longer follows.
 Argument fails.

---

E. The government will not incur any costs in closing its facilities for stockpiling helium.
Why wrong
This sounds tempting because it mentions costs.
But it is too strong and unnecessary.
The argument only needs the net proceeds to exceed the debt.
Some closure costs could exist.
Example:
Debt = $100
Helium value = $125
Closure costs = $5
Net proceeds = $120
Debt still reduced.
So zero costs are not required.
Elimination clue
Assumption questions often trap you with an extreme version of what is needed.
The argument needs:
costs won't exceed the surplus
Choice says:
costs are exactly zero
Too strong.
-----------

3. 725+ SCORER INTERNAL THOUGHT PROCESS (Under 15 Seconds)
 "Helium is worth only 25% more than the debt. That's a thin margin. If the government dumps a huge helium stockpile onto the market, prices could fall and erase that surplus. I'm looking for an assumption that the sale won't destroy the market value."

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4. TAKEAWAYS

* Pattern: Asset-sale argument → check whether the stated market value can actually be realized.
* Recognition Trigger: Whenever a conclusion depends on selling a large asset, ask: Will the sale itself change the price?
* Elimination Lesson: Motives of the speaker rarely matter in assumption questions.
* Elimination Lesson: "Significant reduction" is different from merely "some reduction."
* Elimination Lesson: Beware of answers requiring zero cost when the argument only requires costs to be small enough.

Lawmaker: Raising taxes is not the only means of reducing

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Lawmaker: Raising taxes is not the only means of reducing

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