Noting that the Federal Reserve had raised a key short-term

Question

Noting that the Federal Reserve had raised a key short-term interest rate against last month, analysts said that they expected orders for durable goods to decline soon because  rising interest rates makes it more expensive to buy them on credit .

(A) rising interest rates makes it more expensive to buy them on credit
(B) rising interest rates make buying on credit more expensive
(C) a rise in interest rates make it more expensive to buy on credit
(D) a rise in interest rates make buying on credit more expensive
(E) a rise in interest rates makes it more expensive for them to be bought on credit

https://www.nytimes.com/1995/04/27/business/march-durable-goods-orders-had-an-unexpected-rebound.html

The Federal Reserve has raised a key short-term interest rate seven times since February 1994. Analysts had expected the orders for durable goods to decline in March, because the orders are usually affected by  rising interest rates that make buying on credit more expensive .

TommyWallach · Accepted Answer

Hey All,

Plenty of confusion here, so I thought it might be worth my weighing in:

Noting that the Federal Reserve had raised a key short-term interest rate against last month, analysts said that they expected orders for durable goods to decline soon because rising interest rates makes it more expensive to buy them on credit.

(A) rising interest rates makes it more expensive to buy them on credit
(B) rising interest rates make buying on credit more expensive
(C) a rise in interest rates make it more expensive to buy on credit
(D) a rise in interest rates make buying on credit more expensive
(E) a rise in interest rates makes it more expensive for them to be bought on credit

Okay looking here, we have a couple categories that should jump out. First is simple subject-verb agreement. We notice because the verb "make" goes singular and plural. A is out because "rising interest rates" are plural, so the verb shouldn't have an -s on the end. C and D are also out, because "a rise" is singular, so the verb should be "makes".

We're left with B and E. This is one of the VERY RARE times when it comes down to a concision/voice issue. What I mean is that B and E say the same thing, but E does it using the horribly wordy passive voice (to be bought). Notice that both B and E have a bad pronoun (them is highly ambiguous, because it could refer to durable goods, orders, interest rates...almost anything), but because they BOTH have it, we don't need to worry about this issue.

The correct answer is B. Hope that helps!

-t

TommyWallach · Answer

Hey All,

A gerund is an -ing word that is a NOUN formed from a verb. "The running of the bulls", for example. A participle is an -ing or -ed word that is an ADJECTIVE formed from a verb. If I say "rising interest rates", "rising" is clearly an adjective/participle modifying "interest rates". If I said, "The sun's rising came as a shock", now "rising" has become a noun/gerund. Is that clear?

-tommy

x2suresh · Answer

It --> has no clear reference
A,C,E --> OUT

D- a rise -- make (wrong sub-verb agreement)

B is the best.. (rising-adj) rates -- make (No problem with S-V agreement and also No agmbiguity)

karlovy · Answer

Sorry to post a basic question here but I'm confused. Could someone please explain the S-V agreement here ? For me, "rising interest rates" could be a gerund verbal phrase so it could be a singular subject, couldn't it ?

noboru · Answer

Same problem here...How do you know that rising is and adjective and not a gerund?
Thanks.

nusmavrik · Answer

tommy

I don't think "it" really refers to anything in choice E. it is singular hence cannot refer to goods.
them to be brought on credit ----> so i think them refers to goods.

Correct me if I'm wrong.

I agree E is passive.

TommyWallach · Answer

Hey Nusma,

That's a tough one. We sometime use "it" without a referent, so I'd allow it in answer choice E. An example of this would be "It's crazy how hot it is today." Neither "it" refers to anything, but we allow it (ha!). The bigger problem with E is the "them".

Hope that makes sense!

-t

noboru · Answer

Is not so clear.
"Rising rates is a measure taken by the Federal Reserve to bla bla bla..."
In this case Rising is a gerund, and therefore Singular.

In this SC question, i dont see that "rising" is an adjective modifying rates...

TommyWallach · Answer

Hey Noburu,

"Rising rates..." is not a gerund. "Rising" is simply an adjective (participle) modifying the NOUN rates. Gerund's are when the "-ing" word ITSELF is the noun: "The rising of the sun is beautiful", or "The running of the bulls is a lot of fun." See how, in those examples, "rising" and "running" are the actual nouns?

If an -ing word modifies another noun, we call it a participle, which is functionally an adjective (like a gerund is functionally a noun): "The rising tide is coming." "The flying monkeys are going to eat us!" etc.

Hope that helps!

-tommy

noboru · Answer

Im still not catching this thing.

I understand your points, and I see that an -ing can be both an adjective modifying a noun and a gerund.

However, look at this example:
Rising rates IS the measure taken by the Goverment to...

Here, rising is a gerund, isnt it?

It is referring to the action of rising (rates), not to the rates.

Very confusing stuff.

TommyWallach · Answer

Hey Noburu,

Yes, it's very confusing. Just remember, if the -ing word is modifying another word, it's not a gerund, but a participle. Gerunds are NOUNS, and participles are ADJECTIVES.

In the phrase "rising rates", "rising" is very clearly modifying "rates". Modifiers can't be nouns, and gerunds are nouns.

In the phrase "the rising of the rates", "of the rates" is a prepositional modifier modifying "the rising", which is not clearly a noun, so it must be a gerund.

Make more sense?

-t

noboru · Answer

Sorry Tommy, but I dont see it.

Let me provide another example that may sound familiar to you:

Tracking satellites IS important for the space agency.

According to Manhattan SC, "Tracking" is a Simple Gerund. 
This is exactly how I interpret the problem at issue: Rising rates IS...

"The rising of the rates" is of course a Gerund (a complex gerund, as per MSC).

Many thanks in advance.

noboru · Answer

Hi Tommy, Aside from the question above regarding gerunds, I have another one regarding the usage of "it". Above you say that that usage is correct. But in this other post, I understand that you say other thing (specifically when you explain why A is incorrect). Please, could you clarify this point? Many thanks in advance. Here is the link, and below your post. sc-doubt-81117.html#p734676 Hey All, Everybody's pretty much talked this one to death, but I got asked by PM to take on one particular issue, so I'll just run through all the answer choices, while I'm here. 97. Although the coordination of monetary policy can help facilitate the orderly financing of existing imbalances, it is unlikely that its effect on their size is significant in the absence of an appropriate fiscal adjustment. (A) it is unlikely that its effect on their size is significant PROBLEM: The use of "it" here twice to mean two different things is grammatically unfeasible. The first "it" has no referent (That's the "it" we use to start out clauses, such as "It's crazy how much fire there is in here."), and the second refers to "the coordination..." (B) it is unlikely that the size of their effect would be significant PROBLEM: We want to imply the effect on the size of imbalances, not the size of the effect. (C) affecting their sizes are not likely to be significant PROBLEM: The subject of "are" here is...what? Maybe "affecting"...doesn't make any sense. (D) the significance of their effect on its size is unlikely PROBLEM: We don't mean the significance is unlikely, but that it's unlikely to be significant. (E) its effect on their size is not likely to be significant ANSWER: Isn't it pretty? Like in ALL the answer choices, the "its" refers to "the coordination...". Hope that helps! -t

TommyWallach · Answer

Hey Noburu,

I'll post the same response in both places, just in case. However, I believe that I'm entirely consistent in these two examples. It's okay to start a sentence/clause with it, as in: "It sure is raining a lot today." Yes, that "it" has no antecedent, but we allow this usage. In the example you cite here, the problem in answer choice A is not the first "it", but the second "it", which could be referring to "coordination" or "orderly financing". Though ambiguity is an issue that GMAT sometimes ignores and sometimes doesn't, it's clearly better here to get rid of that extra pronoun. Remember that we ALSO have a "their", which makes for three pronouns in 8 words (in answer choice A).

Hope that's clearer!

-t

BKimball · Answer

I agree with all the work people have done here. A quick note about singular/plural in this construction. Both of the following can be correct:

"Rising interest rates make borrowing more expensive."

"Rising interests rates makes borrowing more expensive."

The difference between the two is that in the first examples, we are talking about the various interest rates that are rising individually. In the second example, we're referring to the collective rising of interest rates.

Consider:

"The attitude of students in my class is generally negative." --> Here we're referring to the collective, overall attitude.
"The attitudes of students in my class are generally negative." --> Here we're referring to the attitudes individually, and we're saying that maybe 9 out of 11 are negative.

The difference between the students and interest rates example is that you can't make "Rising" plural...at least not in English.

tuliosoria · Answer

I am not English native. Sorry, what is the real diference of rising interest and a rise in interest?

Best!
Tulio Soria

PiyushK · Answer

rising -- continuous process -- thus rising interest = interest that are proportionally increasing with time. 
A rise in interest = just one time rise in interest.

PiyushK · Answer

What is wrong with A. In B meaning is changing. 
interest != interest rates.

Interest means actual amount  = \frac{interest rate}{100}* Principle

A is presenting place holder it concept.

A. rising interest makes it more expensive to buy them on credit
 -rising interest makes 'to buy goods on credit' more expensive

A) rising interest makes it more expensive to buy them on credit -- looks grammatically fine.
(B) rising interest rates make buying on credit more expensive -- change in meaning -- grammatically fine. 
(C) a rise in interest rates make it more expensive to buy on credit -- S-V error.
(D) a rise in interest rates make buying on credit more expensive -- S-V error.
(E) a rise in interest rates makes it more expensive for them to be bought on credit -- expensive for goods -- nonsensical.

daagh · Answer

'Rising interest' rates ... makes' is wrong in A. 'A rise in interest rates make' is wrong in C and D. Between B and E, it doesn't take too long to dismiss E on wordiness. B remains

Noting that the Federal Reserve had raised a key short-term

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Noting that the Federal Reserve had raised a key short-term

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