The economic recession of the last year has prompted many organization

This type of question can be handled as follows:

Step 1: Identifying the premise and the conclusion

Prediction: layoffs would cause people to cut back on their discretionary spending even if their jobs were secure, in anticipation of coming hard times

Fact : But there has been no increase in the amount of money set aside by the general public in savings accounts.

The above prediction and fact can be restated as premise and conclusion as follows:

Premise : there has been no increase in the amount of money set aside by the general public in savings accounts.

Conclusion: layoffs did not cause people to cut back on their discretionary spending in anticipation of coming hard times


Step 2 - Finding the type of question:

The question asks how important is the explanation that layoffs would cause people to cut back on their discretionary spending? The conclusion in step 1 says that the explanation was not significant. We are always looking for something that strengthens the conclusion. So the question effectively is which choice strengthens the fact that the explanation was not significant i.e., people would not cut back on the discretionary spending


Step 3: Finding the right choice

Since this is treated as a strengthen question, the next step is to negate each choice and see which (i) weakens the premise or (ii) negates the conclusion underlined in step 2.

Choice C seems best because if you negate it which is, " There has been no increase in the cost of necessities during the period since the layoffs" means people have money to save and that might as predicted make them to save for future security by cutting on their discretionary spending. Thus the negation satisfies (i) above i.e., weakens the premise.

None of the other choices do the above.

Therefore the answer is choice C.