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# Plan: Concerned about the welfare of its senior citizens,

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03 Aug 2012, 16:46
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Plan: Concerned about the welfare of its senior citizens, the government of Runagia decided two years ago to increase by 20 percent the government-provided pension paid to all Runagians age sixty-five and older.

Result: Many Runagian senior citizens are no better off financially now than they were before the increase.

Further information: The annual rate of inflation since the pension increase has been below 5 percent, and the increased pension has been duly received by all eligible Runagians.

In light of the further information, which of the following, if true, does most to explain the result that followed implementation of the plan?

(A) The majority of senior citizens whose financial position has not improved rely entirely on the government pension for their income.

(B) The Runagian banking system is so inefficient that cashing a pension check can take as much as three weeks.

(C) The prices of goods and services that meet the special needs of many senior citizens have increased at a rate much higher than the rate of inflation.

(D) The pension increase occurred at a time when the number of Runagians age sixty-five and older who were living below the poverty level was at an all-time high.

(E) The most recent pension increase was only the second such increase in the last ten years.
[Reveal] Spoiler: OA

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03 Aug 2012, 18:54
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Hi Betterscore,

Despite the oddness of the question stem and the unusual formatting of the stimulus, we shouldn't be concerned. Reading and identifying the question stem makes it clear that this is an "explain" type question, which means that there is a mystery or contradiction that we are attempting to resolve. The question stem also tells us WHAT that mystery is: why did this plan did not result in what was expected?

So, we should untangle the stimulus. What's the mystery of the plan? Well, the elderly citizens of Runagia are getting substantially more pension money. But, this money isn't actually helping them! They are no better off.

When you predict an answer to an explain question (and you should always predict the answer!), sometimes a single solution will leap into your head, but other times multiple resolutions present themself. On first read through, I immediately thought of two explanations: 1) the pensions make up way too small a proportion of Runagian retirement plans to help, so the increase is useless, or 2) some expense, tax, or lifestyle change offset the extra money.

With a few well-thought, if loose, predictions, we can move to the final step: evaluating the answer choices. Sure enough, (C) matches our prediction exactly, and is the correct answer. Note that our other prediction wasn't useless; it is 180 degrees the opposite of (A), letting us quickly rule out this potentially distracting trap answer!

Thanks for posting this question, and good luck on your studies!

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03 Aug 2012, 21:58
The galloping price hike of the goods.more than the inflation could not get adjusted by the increased pension.
So, (C)
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04 Aug 2012, 13:07
mandyrhtdm wrote:
IS this a new Question Type ?

This is a classic Explain question. The formatting of it is a little unusual, but the GMAT throws curveballs from time to time!
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01 Dec 2013, 16:15
Can some one shed some light on A again ?
Why is A eliminated ?
It seems that persons whose sole source of income is pension will not be better off than those who have multiple sources of income. So A can still play a role in explaning the paradox.
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27 Dec 2013, 03:45
prepat wrote:
Can some one shed some light on A again ?
Why is A eliminated ?
It seems that persons whose sole source of income is pension will not be better off than those who have multiple sources of income. So A can still play a role in explaning the paradox.

Hey There,

Option A just says that the only source of income for pensioners is government pension and it is not enough to bridge the gap between pension amount increase and financial improvement.

So, it is eliminated by PoE. Hope this helps.
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27 Dec 2013, 10:06
Correct ans C . Though the the annual rate of inflation, since the pension increase has been below 5 percent, the special needs of the elderly have risen at a higher rate than the overall inflation. Therefore, it explains the discrepancy.....

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28 Dec 2013, 12:20
prepat wrote:
Can some one shed some light on A again ?
Why is A eliminated ?
It seems that persons whose sole source of income is pension will not be better off than those who have multiple sources of income. So A can still play a role in explaning the paradox.

I will try.

Lets say their monthly expenses were \$10 and they received pension of \$9. So their present financial condition is in bad shape. Now there is a 20% increase in \$9 pension so \$10.80. So we can assume their financial position has got better. But the question says their financial position is no better than before. For this the expenses also has to rise. Hence choice C.

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03 Oct 2014, 10:45
I eliminated A, B & E, and could not decide between C and D.

chose D, because did not consider that the rate of old people who were living below the poverty level, although at a record high, might mean in reality a small proportion of the population.

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17 Jan 2016, 07:27
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.

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15 Mar 2016, 18:08
KapTeacherEli wrote:
Hi Betterscore,

Despite the oddness of the question stem and the unusual formatting of the stimulus, we shouldn't be concerned. Reading and identifying the question stem makes it clear that this is an "explain" type question, which means that there is a mystery or contradiction that we are attempting to resolve. The question stem also tells us WHAT that mystery is: why did this plan did not result in what was expected?

So, we should untangle the stimulus. What's the mystery of the plan? Well, the elderly citizens of Runagia are getting substantially more pension money. But, this money isn't actually helping them! They are no better off.

When you predict an answer to an explain question (and you should always predict the answer!), sometimes a single solution will leap into your head, but other times multiple resolutions present themself. On first read through, I immediately thought of two explanations: 1) the pensions make up way too small a proportion of Runagian retirement plans to help, so the increase is useless, or 2) some expense, tax, or lifestyle change offset the extra money.

With a few well-thought, if loose, predictions, we can move to the final step: evaluating the answer choices. Sure enough, (C) matches our prediction exactly, and is the correct answer. Note that our other prediction wasn't useless; it is 180 degrees the opposite of (A), letting us quickly rule out this potentially distracting trap answer!

Thanks for posting this question, and good luck on your studies!

Regards,

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07 Jul 2016, 08:43
robu wrote:
KapTeacherEli wrote:
Hi Betterscore,

Despite the oddness of the question stem and the unusual formatting of the stimulus, we shouldn't be concerned. Reading and identifying the question stem makes it clear that this is an "explain" type question, which means that there is a mystery or contradiction that we are attempting to resolve. The question stem also tells us WHAT that mystery is: why did this plan did not result in what was expected?

So, we should untangle the stimulus. What's the mystery of the plan? Well, the elderly citizens of Runagia are getting substantially more pension money. But, this money isn't actually helping them! They are no better off.

When you predict an answer to an explain question (and you should always predict the answer!), sometimes a single solution will leap into your head, but other times multiple resolutions present themself. On first read through, I immediately thought of two explanations: 1) the pensions make up way too small a proportion of Runagian retirement plans to help, so the increase is useless, or 2) some expense, tax, or lifestyle change offset the extra money.

With a few well-thought, if loose, predictions, we can move to the final step: evaluating the answer choices. Sure enough, (C) matches our prediction exactly, and is the correct answer. Note that our other prediction wasn't useless; it is 180 degrees the opposite of (A), letting us quickly rule out this potentially distracting trap answer!

Thanks for posting this question, and good luck on your studies!

Regards,

Well, D is true but indirect in a sense that since citizenry are below the poverty line they have more want and to satisfy this want they spend pension money which is inadequate. See how much indirect cause it is

On the other hand C is so much straightforward since it tells how they are spending money which is not that much sufficient

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16 Jul 2016, 14:41
But in Option C the price increase of the items used by senior citizens could be less than 8%, because it is just mentioned that the rate is higher than inflation. So if it is far less than the % increase of welfare then the argument fails. Can some please explain.

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19 Jul 2016, 05:08
ravikrishna1979 wrote:
But in Option C the price increase of the items used by senior citizens could be less than 8%, because it is just mentioned that the rate is higher than inflation. So if it is far less than the % increase of welfare then the argument fails. Can some please explain.

Unlike in assumption type questions, in which "must be true" kind of reasoning needs to be satisfied, in explain discrepency type questions (like this one), one does not need to CONFIRM the result; a statement that COULD be a possible explanation would suffice. Here option C could be a possible explanation (IF the rate of increase of price is high enough so as to offset the effect of pension rise), hence is the right answer.

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17 Nov 2016, 04:12
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Responding the following question received in a PM:
"When the argument said that inflation is not much high, then how come few goods of old people got increased?
Doesn't inflation cover the prices of different products/goods?"

The inflation rate is calculated taking into account the price change of a basket of specific items - the basket does not contain ALL the items in the economy, but only some that the economists consider representative of the complete economy. "Few goods of old people" may not be in the basket.

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08 Jul 2017, 23:22
Hi GMATNinja

Can you explain how we ruled out (E)
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25 Aug 2017, 23:46
Hi GMATNinja

Can you explain how we ruled out (E)

Hello adkikani Let me try to explain why E is incorrect if you don't mind.

(E) The most recent pension increase was only the second such increase in the last ten years.

First of all, we are not sure of:
- How much was the initial pension?
- How much did the pension increase for the first time? It may be 5% or it may be 100%

As we are not sure of above information, we cannot conclude that the second increase will not help the senior citizens. The only thing what we know from the passage is that the second increase could have made the life the senior citizens better. If it is not we need to find reasons for the same based on the given information in the passage.

Hope this helps.
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01 Oct 2017, 01:11
robu wrote:

Because D actually says that most SC>=65 were u/PL. Therefore, according to D, the financial level of the senior citizens must actually improve. It does not do a bit to explain the conclusion.

And according to me, A could have easily been an assumption for the conclusion.

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