Many economists believe that a high rate of business savings

Well, I've been sleeping for five hours on average last week, as only late night was when I really have time to sit down and do some studying. But I'm taking the next week off from work, so I would be able to sleep some more now. Thanks guys.

(ps, not a he either. I'm in fact an AI. ;))

BDA...All correct... 8 mins 30 secs.

Got the answer as BDE : Time 5.3 min.

Why is option E wrong. Can any one clarify pls

Let me try to answer.
Firstly,option A correct as the information is clearly and expilcitly given in the passage.
For option E,the economists theory is given in the passage as inaccurate as well as inconsistent because there are two scenarios given in which claim made by economists dont work.So,word 'overestimate' is incorrectly used.


Hope it helps.

Key points:

a. Many economist belive that business saving influences investment.

b. Also, good saving helps in reducing the interest rate on lending money repayment.

c. But facts are opposite; author provides some examples. There is some other factor which influences saving/investments. In fact, interest rate influences saving/investment.

-> Primarily, author talks about what many economist feel and then provides some facts/examples to show they are wrong.


The passage is primarily concerned with
A. contrasting trends in two historical periods
B. presenting evidence that calls into question certain beliefs
C. explaining the reasons for a common phenomenon
D. criticizing evidence offered in support of a well-respected belief
E. comparing conflicting interpretations of a theory

-"Clearly, real interest rates respond to influences other than the savings/investment nexus. Indeed, real interest rates may themselves influence swings in the savings and investment rates."

According to the passage, which of the following resulted from foreign
investment in the United States after 1979?
A. An increase in real interest rates
B. A decrease in the savings rate of certain other nations
C. An increase in American investment abroad
D. An increase in the price of American goods abroad
E. A decrease in the price of domestic goods sold at home

-"As real interest rates shot up after 1979, foreign investors poured capital into the United States, the price of domestic goods increased prohibitively abroad, and the price of foreign-made goods became lower in the United States."

The author of the passage would be most likely to agree with which of the following
statements regarding the economists mentioned in line 1?
A. Their beliefs are contradicted by certain economic phenomena that occurred in the
United States during the 1960's and the 1980's.
B. Their theory fails to predict under what circumstances the prices of foreign and domestic
goods are likely to increase.
C. They incorrectly identify the factors other than savings and investment rates that
affect real interest rates.
D. Their belief is valid only for the United States economy and not necessarily for other
national economies.
E. They overestimate the impact of the real interest rate on the national savings
and investment rates.

- This is the main idea.

Time taken - 6 mins 30 seconds

Got all the answers correct.

Total 6 mins 40 seconds , including 3 mins 20 seconds to read .

1.The passage is primarily concerned with
B. presenting evidence that calls into question certain beliefs - Correct - the passage presents evidence to question the belief of many economists

2. According to the passage, which of the following resulted from foreign investment in the United States after 1979?
D. An increase in the price of American goods abroad - As real interest rates shot up after 1979, foreign investors poured capital into the United States, the price of domestic goods increased prohibitively abroad, and the price of foreign-made goods became lower in the United States.

3.The author of the passage would be most likely to agree with which of the following statements regarding the economists mentioned in line 1?
A. Their beliefs are contradicted by certain economic phenomena that occurred in the United States during the 1960's and the 1980's. - Correct

I did a silly mistake in question number 2 - I marked choice A which is a correct inference, but not caused by "the foreign investment." Silly me.
Takeaway - please read the question very carefully and completely, and only then answer the question.

"As real interest rates shot up after 1979, foreign investors poured capital into the United States, the price of domestic goods increased prohibitively abroad, and the price of foreign-made goods became lower in the United States."
-------
In this sentence I guessed that "domestic" doesn't have a clear reference, and hence it is a dis-tractor, but later found that in that COMPLETE sentence it was referred clearly. Take Away - read the complete sentence to infer anything.

Hi workout ,
I narrowed it down to B and D but ended up selecting D for question no. 1

1. The passage is primarily concerned with

(A) contrasting trends in two historical periods
(B) presenting evidence that calls into question certain beliefs
(C) explaining the reasons for a common phenomenon
(D) criticizing evidence offered in support of a well-respected belief
(E) comparing conflicting interpretations of a theory



I believe that the author doesnt call any belief into question rather he is criticizing the belief by supporting it with and evidence.

Where am i wrong?

P1- Economists believes
P2- Further beliefs
P3- Para start with however, some contrast for above belief

Main point - Some belief of economists are resented and some evidence contradicting to it is presented.

1. The passage is primarily concerned with

(A) contrasting trends in two historical periods --- NO. Contrast is not there and historical period is also off.
(B) presenting evidence that calls into question certain beliefs --- The belief is that when savings exceed business investment then the interest rate is low and vice versa. "Clearly, real interest rates respond to influences other than the savings/investment nexus. " --- This one calls above into question.
(C) explaining the reasons for a common phenomenon -- Full passage is not covered in it.
(D) criticizing evidence offered in support of a well-respected belief --- No for sure.
(E) comparing conflicting interpretations of a theory ---- interpretations does not seem that way.

------------------------------------------------
2. According to the passage, which of the following resulted from foreign investment in the United States after 1979?
Lines to read - As real interest rates shot up after 1979, foreign investors poured capital into the United States, the price of domestic goods increased prohibitively abroad, and the price of foreign-made goods became lower in the United States. Clearly D is the answer.

(D) An increase in the price of American goods abroad

------------------------------------------------

3. The author of the passage would be most likely to agree with which of the following statements regarding the economists mentioned in line 1?
Answer A undeniably correct As time line matches.

(A) Their beliefs are contradicted by certain economic phenomena that occurred in the United States during the 1960's and the 1980's.

BDA, time taken 3.37 including reading passage

In q 1. how can we choose *beliefs* ???? There is just one belief that High business saving rate increases investment. Why the 's ? I rejected B for the same. Also, on one of the RC's on GMATCLUB I encountered a similar trick, so this time i ditched this option. But, AlAS !!!!!!!

In q3 I was confused between c and e.

Can someone explain why c is wrong too ? Ty

Posted from my mobile device

This is the evidence provided by the author :-



However, Author is not criticizing this evidence anywhere in the passage.

Hope it helps

3. The author of the passage would be most likely to agree with which of the following statements regarding the economists mentioned in line 1?

(A) Their beliefs are contradicted by certain economic phenomena that occurred in the United States during the 1960's and the 1980's.
(B) Their theory fails to predict under what circumstances the prices of foreign and domestic goods are likely to increase.
(C) They incorrectly identify the factors other than savings and investment rates that affect real interest rates.
(D) Their belief is valid only for the United States economy and not necessarily for other national economies.
(E) They overestimate the impact of the real interest rate on the national savings and investment rates.

Why E can't be answer for Question =3 ?

i rejected A because their belief was high rate of business savings in the United States is a necessary precursor to investment. They didn't take into account other factors that could vary rate. So it means they over emphasized the impact of real interest rate on the national savings and investment rates.

GMATNinja VeritasKarishma

Got all answers correct in 6min including 3min20 to read the passage.

Posted from my mobile device