GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 25 Jun 2019, 13:06

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

Privatization of the large state enterprises that comprise the industr

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

 
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 55801
Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 05 Jan 2019, 06:45
00:00
A
B
C
D
E

Difficulty:

  65% (hard)

Question Stats:

62% (02:10) correct 38% (02:24) wrong based on 199 sessions

HideShow timer Statistics


Privatization of the large state enterprises that comprise the industrial sector in Russia is proceeding slowly, due to competing claims of ownership by various groups. Continued government subsidization of these enterprises creates large deficits that drive up the inflation rate and cause the ruble's value to decline. It is therefore unlikely that the government will make the ruble freely convertible to Western currencies until the question of ownership of state enterprises has been resolved.

If the author's prediction concerning the ruble is accurate, which of the following conclusions can most reliably be drawn?


(A) The industrial sector accounts for at least fifty percent of Russia's economic activity.

(B) Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline.

(C) The Russian government can indefinitely withstand the expense of subsidiary state enterprises.

(D) The Russian government is among the groups claiming ownership of certain state enterprises.

(E) The Russian government is under pressure from the West to make the ruble freely convertible to Western currencies.

_________________
Manager
Manager
User avatar
G
Joined: 28 Aug 2018
Posts: 227
Re: Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 05 Jan 2019, 06:51
IMO B

prethink: why the russian govt wont allow ruble to be freely convertible to Western currencies until the question of ownership of state enterprises has been resolved. the reason is that it does not want the currency to decline further because of inflation and large deficit.

(B) Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline.
_________________
"Press +1 KUDOS"

Be very critical of my Post
Ask as many questions of my post possible
Math Expert
User avatar
V
Joined: 02 Sep 2009
Posts: 55801
Re: Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 10 Jan 2019, 04:23
Bunuel wrote:
Privatization of the large state enterprises that comprise the industrial sector in Russia is proceeding slowly, due to competing claims of ownership by various groups. Continued government subsidization of these enterprises creates large deficits that drive up the inflation rate and cause the ruble's value to decline. It is therefore unlikely that the government will make the ruble freely convertible to Western currencies until the question of ownership of state enterprises has been resolved.

If the author's prediction concerning the ruble is accurate, which of the following conclusions can most reliably be drawn?


(A) The industrial sector accounts for at least fifty percent of Russia's economic activity.

(B) Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline.

(C) The Russian government can indefinitely withstand the expense of subsidiary state enterprises.

(D) The Russian government is among the groups claiming ownership of certain state enterprises.

(E) The Russian government is under pressure from the West to make the ruble freely convertible to Western currencies.


KAPLAN OFFICIAL EXPLANATION:



B

This question asks for the most reliable conclusion based on the author's prediction concerning the ruble. The author describes a chain of cause and effect and ends with a prediction: Competing claims of ownership are slowing efforts to privatize state enterprises; these enterprises must still be subsidized by the government; government subsidies lead to large deficits; deficits drive up the inflation rate; high inflation causes the ruble's value to decline. In a nutshell, the disagreement over ownership is causing the ruble to decline in value. The author's conclusion, which we're told to accept as accurate, is that until the question of ownership has been resolved, the Russian government probably won't make the ruble freely convertible to Western currencies.

Be on the lookout for new ideas that occur in the conclusion. Here you should have thought, "What more is going on here? What else is the author assuming?" We want the connection the author sees between the competing claims for ownership and the conclusion's completely new idea of making the ruble freely convertible. Well, her point about the competing claims is that they cause the ruble's value to decline. So look for a choice that connects the action of making the ruble freely convertible to a decline in the ruble's value. (B) fits this scenario by concluding that making the ruble freely convertible to Western currency would also cause the ruble's value to decline, thereby (inferably) making matters worse. (B) explains quite nicely why the state's ownership of enterprises postpones the ruble's convertibility.

If you didn't see (B)'s place in the argument, you could have arrived at it anyway by eliminating the choices that couldn't be correct (a Kaplan method that works rather nicely here). (A) is unwarranted. Nothing in the argument justifies assigning a percentage to the industrial sector. (C) contradicts the spirit of the passage, which says that government subsidies are creating a strain, in the form of large deficits, on the economy. The statement that the government can withstand this strain is definitely farfetched. Contraiy to (D), the argument doesn't state that the government is among the parties squabbling over ownership of state enterprises, but only that until the squabble is resolved the enterprises
must remain in state hands. (E) would explain why the Russian government might want to make the ruble convertible in the first place, but one, there's no hint of it in the passage, and two, it doesn't jibe with the conclusion that the government will probably wait to make the ruble convertible.
_________________
Intern
Intern
avatar
B
Joined: 26 Nov 2018
Posts: 11
Re: Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 10 Jan 2019, 04:56
How would we can tell about future cause in inference question?

Posted from my mobile device
Senior Manager
Senior Manager
User avatar
P
Joined: 07 Dec 2017
Posts: 317
GMAT 1: 660 Q50 V30
Reviews Badge
Re: Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 13 Jan 2019, 21:47
I don't understand, how can we say govt intention of not making ruble freely convertible if fear for further decrease in value
Manager
Manager
avatar
B
Joined: 29 Nov 2016
Posts: 119
CAT Tests
Re: Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 13 Jan 2019, 22:43
This is an inference question. I don't think you can use outside information for inference questions to prove your point. You really have to stick to the facts available.

How can one say that tying rubal to western currency will decline its value?

What if it takes 10 years to settle the privatisation claim. The value has already declined alot by then since government is still paying for the companies. In that case, rubal will definitely further weaken even after completing the privatisation claim.

Experts please suggest.

Gladiator59 VeritasKarishma

Posted from my mobile device
Senior PS Moderator
User avatar
D
Status: It always seems impossible until it's done.
Joined: 16 Sep 2016
Posts: 748
GMAT 1: 740 Q50 V40
GMAT 2: 770 Q51 V42
GMAT ToolKit User Reviews Badge
Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 14 Jan 2019, 00:47
1
Even though it is almost always incorrect to predict the future in inference type questions on the GMAT, here, the question stem itself has a huge giveaway.
It states - "If the author's prediction concerning the ruble is accurate" - what is this prediction?
Causes:
Competing claims of ownership(root cause) -> Slow privatization -> Continued government subsidization
Tangible Effects:
(Continued government subsidization) -> large deficits -> higher inflation rate -> Ruble's value declines (final effect and Author's prediction)

Okay, so due to the current happenings, we know for sure that the author predicts a decline in the value of Ruble. What more, we have been given that this prediction is accurate.

The author, knowing all this suggests that "It is therefore unlikely that the government will make the ruble freely convertible to Western currencies" suggesting that this step would somehow help to counter the final effect in the causal relationships. ( Assuming that the Russian government intends to stop the decline in Ruble's value )

(B) Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline. The only option that ties to the above thinking. Going against what the Govt. intends to do needs to have some negative consequences.

Hope this is helpful.

Mudit27021988 wrote:
This is an inference question. I don't think you can use outside information for inference questions to prove your point. You really have to stick to the facts available.

How can one say that tying rubal to western currency will decline its value?

What if it takes 10 years to settle the privatisation claim. The value has already declined alot by then since government is still paying for the companies. In that case, rubal will definitely further weaken even after completing the privatisation claim.

Experts please suggest.

Gladiator59 VeritasKarishma

_________________
Regards,
Gladi



“Do. Or do not. There is no try.” - Yoda (The Empire Strikes Back)
Manager
Manager
avatar
B
Joined: 29 Nov 2016
Posts: 119
CAT Tests
Re: Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 14 Jan 2019, 00:56
Gladiator59 wrote:
Even though it is almost always incorrect to predict the future in inference type questions on the GMAT, here, the question stem itself has a huge giveaway.
It states - "If the author's prediction concerning the ruble is accurate" - what is this prediction?
Causes:
Competing claims of ownership(root cause) -> Slow privatization -> Continued government subsidization
Tangible Effects:
(Continued government subsidization) -> large deficits -> higher inflation rate -> Ruble's value declines (final effect and Author's prediction)

Okay, so due to the current happenings, we know for sure that the author predicts a decline in the value of Ruble. What more, we have been given that this prediction is accurate.

The author, knowing all this suggests that "It is therefore unlikely that the government will make the ruble freely convertible to Western currencies" suggesting that this step would somehow help to counter the final effect in the causal relationships. ( Assuming that the Russian government intends to stop the decline in Ruble's value )

(B) Making the Russian ruble freely convertible to Western currencies will cause the ruble's value to decline. The only option that ties to the above thinking. Going against what the Govt. intends to do needs to have some negative consequences.

Hope this is helpful.

Mudit27021988 wrote:
This is an inference question. I don't think you can use outside information for inference questions to prove your point. You really have to stick to the facts available.

How can one say that tying rubal to western currency will decline its value?

What if it takes 10 years to settle the privatisation claim. The value has already declined alot by then since government is still paying for the companies. In that case, rubal will definitely further weaken even after completing the privatisation claim.

Experts please suggest.

Gladiator59 VeritasKarishma


Thanks for a quick response. Although, I still feel that there is a big underlying assumption that russian government wants to prevent the decline. This is something that is not given and is an assumption.

But I understand the takeaway.

Thanks and kudos.

Posted from my mobile device
Intern
Intern
avatar
B
Joined: 22 Oct 2017
Posts: 10
Location: India
Concentration: Finance, Marketing
WE: Law (Law)
Re: Privatization of the large state enterprises that comprise the industr  [#permalink]

Show Tags

New post 15 Jan 2019, 01:34
Option B certainly looks the best. Going through the options, Option B, to begin with looked as if it were a trap. Consider this scenario- The stabilisation of value of currency might be a condition precedent to the free convertibility of the Ruble but once freely convertible, the decline in currency might not happen. This is where "most reliably" question can be tricky, I guess. Compared to other alternatives, this one obviously looks the best.
GMAT Club Bot
Re: Privatization of the large state enterprises that comprise the industr   [#permalink] 15 Jan 2019, 01:34
Display posts from previous: Sort by

Privatization of the large state enterprises that comprise the industr

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne