Skywalker18 wrote:
Manufacturing plants in Arundia have recently been acquired in substantial numbers by investors from abroad. Arundian politicians are proposing legislative action to stop such investment, justifying the proposal by arguing that foreign investors, opportunistically exploiting a recent fall in the value of the Arundian currency, were able to buy Arundian assets at less than their true value.
Which of the following, if true, casts the most serious doubt on the adequacy of the Arundian politicians' justification for the proposed legislation?
(A) The Arundian government originally welcomed the fall in the value of the Arundian currency because the fall made Arundian exports more competitive on international markets
(B) Foreign investors who acquired manufacturing plants generally did so with no intention of keeping and running those plants over the long term.
(C) Without the recent fall in the value of the Arundian currency, many of the Arundian assets bought by foreign investors would have been beyond the financial reach of those investors.
(D) In Concordia, a country broadly similar to Arundia, the share of manufacturing assets that is foreign-controlled is 60 percent higher than it is in Arundia.
(E) The true value of an investment is determined by the value of the profits from it, and the low value of the Arundian currency has depressed the value of any profits earned by foreign investors from Arundian assets.
Passage analysis Manufacturing plants in Arundia have recently been acquired in substantial numbers by investors from abroad.Foreign investors have recently bought a good number of manufacturing plants in Arundia.
Arundian politicians are proposing legislative action to stop such investment,Arundia’s politicians want to put a stop to this kind of investment.
They want to enact laws for this purpose.
justifying the proposal by arguing that foreign investors, opportunistically exploiting a recent fall in the value of the Arundian currency, were able to buy Arundian assets at less than their true value.They are defending their objection by saying that:
Foreign investors have taken undue advantage of a recent decrease in the value of Arundia’s currency.
They have bought assets (manufacturing plants) at a much lower price than the true value of these assets.
ConclusionArundian politicians claim that foreign investors, have exploited the opportunity presented by a recent fall in the value of the Arundian currency, and have bought Arundian assets at less than their true value.
Pre-thinkingWeaken FrameworkNow per our understanding of the passage, let’s first write down the weaken framework:
What new information will make us believe less in the politicians’ claim that
Foreign investors have exploited the opportunity presented by a recent fall in the value of the Arundian currency and have bought Arundian assets at less than their true value.
Given that
There has been a recent fall in the value of Arundia’s currency.
Thought process The politicians have based their objection on one sole fact- fall in the currency value.
Had the currency value not been down, the price of the assets would have been higher for the foreign buyers.
The politicians have taken it for granted that the fall in the value of the currency did not impact the value of the assets. That is, the politicians believe that the manufacturing plants were in no way negatively impacted by the fall in the value of the currency.
What if the manufacturing plants were negatively affected by the fall in the currency, that also brought down their market value, much before the investors bought them.
Weakener 1So, if an answer choice says that the market price of the manufacturing plants had already reduced even before the foreign investors bid for them, then it will weaken the conclusion.
Weakener 2The justification that the politicians are offering for the proposal to stop foreign investments Is that the investors are getting more value from the assets than they are paying for it. They are accusing the investors of “exploiting” the decrease in the value of currency.
So, if an option statement shows that the investors are not really gaining more from the assets than they are paying for them, then it will weaken the politicians’ justification for the proposal.
Answer Choice AnalysisOption AThis just indicates the duality in the politicians’ claim. They were happy when they could gain from the decreased currency value situation. And started objection the moment things apparently went against their expectations. But the option does not really weaken their justification for the anti-investment proposal. Thus, this is not the correct choice.
Option BThe reason behind the foreign investment does not really prove that the investors were not really exploiting the opportunity. In fact, in a remote way, it justifies the politicians’ concerns about the foreign investments. This option suggests that the foreign investors were really out to make profits from the currency decrease situation.
Thus, this is not the correct choice.
Option C This supports the politicians’ claims that the foreign investors cashed in on the opportunity.
Thus, this is not the correct choice
Option D
This does not resemble a parallel situation since we do not know the currency value situation in Concordia. This is completely irrelevant to the situation. Thus, this is not the correct choice.
Option EThis option is in line with our weakener 2.
This shows that the foreign investors really did not get more for less value. This weakens the justification used by the politicians for their proposal to stop investments.
Thus, this is the correct choice.
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Updated on: 11 Jul 2021, 09:59
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