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# QOTD: As a result of a recent surge of foreclosures,

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QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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05 Sep 2017, 15:27
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Verbal Question of The Day: Day 96: Critical Reasoning

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Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.

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QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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06 Sep 2017, 05:54
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2
The passage describes the following "snowball effect":

• Many homes are vacant and falling into disrepair.
• We can infer that this has caused property values in the town to plummet.
• Fearing a further decline in the value of their homes, panicked residents will begin to leave town.
• If residents leave town, there will be an even greater number of vacant homes, which will presumably cause property values to continue to fall.
• If property values continue to fall, more residents will presumably panic and leave their homes.

The community spokesperson has a plan: she recommends that, in order to prevent this snowball effect, "the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years." And the question is asking us to find the answer choice that most strongly indicates that this plan is unlikely to achieve its goals.

Quote:
(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.

The purpose of the plan is to prevent the snowball effect. Choice (A) is a reason why residents would NOT leave, which would lessen the snowball effect. If anything, this might contribute to the success of the recommended plan. Choice (A) certainly does not suggest that the plan will fail, so eliminate (A).

Quote:
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.

The spokesperson does not say that implementing the recommended plan is the ONLY way to prevent panicked residents from leaving town. The spokesperson simply suggests that this is ONE way to prevent the snowball effect. Eliminate (B).

Quote:
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.

If crime rates have risen and the town is a less desirable place to live, potential buyers might be discouraged from buying homes in the town, even if special mortgages are offered. Choice (C) is detrimental to the spokesperson's plan, so let's hang on to this one.

Quote:
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.

Notice that choice (D) says "SOME buyers". Sure, some buyers might leave after five years, but as long as the town can encourage people to fill the vacant homes, the snowball effect will be prevented and the plan will succeed. If MOST buyers were to leave after five years, the town could run into the same problem, but if only SOME buyers leave, there is no reason to expect that to happen. Eliminate (D).

Quote:
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.

The argument does not discuss how the special mortgages would be funded. Cutting the funding for many community programs might be a negative consequence of implementing the plan, but this does not suggest that the plan will fail. Eliminate choice (E).

Choice (C) is the best answer.
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##### General Discussion
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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05 Sep 2017, 19:06
IMO D

topic at hand :- Can it prevent snowball effect by encouraging potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years ?

option D tells Government will only be able to attract buyers who won't be able to make payments after 5 years when interest rate are higher, hence snowball effect continues.

Any constructive criticism is always appreciated
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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05 Sep 2017, 22:09
2
IMO D

topic at hand :- Can it prevent snowball effect by encouraging potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years ?

option D tells Government will only be able to attract buyers who won't be able to make payments after 5 years when interest rate are higher, hence snowball effect continues.

Any constructive criticism is always appreciated

Why cannot C is the answer?

In C, If crimes rates are increased, people will leave the city, no matter what mortgages are. Then snowball effect will continue.

In D, Government will able to attract buyers. So snowball effect will stopped now. we don't want to know whether snowball effect continue after 5 years or not.
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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05 Sep 2017, 22:17
Interesting question as the answer choices are re-worded (See: https://gmatclub.com/forum/community-sp ... 53584.html).

IMO C.

D refers to only "some buyers", which is not strong enough to weaken the argument.
C emphasizes the word "significantly" when introducing new information about crime rates. This indicates that the proposed action is not comprehensive and might fail as the adverse living condition (Crime rate) is still there.
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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05 Sep 2017, 22:31
souvik101990 wrote:
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.

Will go with C --It gives a alternate reason that can contribute to snow ball effect.
D-- Some buyers will not able --it also gives a reason but inferior to option C ..
C is stronger than D
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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05 Sep 2017, 22:41
2
souvik101990 wrote:
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.

Conclusion :- Foreclosures------> Vacant homes-----> homes becoming dilapidated------>Fall in price -----> exodus of people and then again back to more foreclosures.

Solution suggested :- Low interest rate mortgages for first 5 years to encourage potential buyers

Any option that negates the effect of the solution is the one which will stand as a wall between the plan and its success.

C--> speaks of increasing crime rates and that the place is becoming less desirable as a place to live. However it does not show us why the plan of offering low mortgage rates will fail. A place becoming less desirable doesn't mean everyone will leave the city.

D--> This option however attacks the core of the assumption of the spokesperson..viz..Low interest rates for first five years. A low interest rate might spur the demand for homes in the short term. however in the long term when the interest rates will rise again, what if the same buyer is not able to pay the increased costs??

hence option D is the only one which serves to weaken the assumption in the plans of the spokesperson.

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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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06 Sep 2017, 00:57
1
A,B and E are out of scope .
D actually supports the program
We are given information that some people will not be able to pay mortgage after 5 years but most of the residents will pay .so drop it .
C on the other hand will cause potential customers to be wary of the crime and therefore they will not buy homes even if the mortgage payments are made lucrative by reducing interest.
C wins

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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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06 Sep 2017, 01:41
Ans d -

Talks about when the plan will no longer be useful
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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06 Sep 2017, 01:55
I would say option C ; if true would not help in achieving the goal.
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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06 Sep 2017, 22:50
IMO D

Option C talks about crime rates which will cause people to leave town , but once crime rates are under control people will prefer to stay in town again and all vacant homes will be purchased.

Government is offering lower interest rates so that people will purchase vacant homes

Option D says if interest rates goes high after first five years , people will not be able to pay remaining amount. so proposed plan will not work
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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10 Sep 2017, 03:52
GMATNinja wrote:

Quote:
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.

The argument does not discuss how the special mortgages would be funded. Cutting the funding for many community programs might be a negative consequence of implementing the plan, but this does not suggest that the plan will fail. Eliminate choice (E).

Choice (C) is the best answer.

Dear GMATNinja

I have interpretation for choice E. If the town will cut funding for many problems, this will affect the community service and hence make less desirable. Why people should buy home in a town that is poor in service? While the town will subsidize the price, it will lower quality of life.

Where did I go wrong?

Thanks
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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11 Sep 2017, 09:46
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values.
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages.
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live.
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs.
answer- c is the correct answer though d is also a strong contender but d is weaker as comapred to a because it is mentioned some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years.
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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12 Sep 2017, 21:16
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Boil it down - To prevent property prices from falling further , town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Type - weaken

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values. - Irrelevant - we are not concerned about those residents
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages. - Incorrect - just because there are other ways , it does not make this way a bad one
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live. - Correct
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years. - ISWAT - some might be very few people and that too might fail in repaying loans after 5 years
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs. Incorrect - it just tells how the town plans to fund and does not weaken the plan

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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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13 Sep 2017, 07:45
Community spokesperson: As a result of a recent surge of foreclosures, many homes in our town are vacant and falling into disrepair. Property values have already plummeted and, unless preventative action is taken, will likely continue to plummet as panicked residents, fearing a further decline in the value of their homes, begin to leave town. To prevent this snowball effect, the town should encourage potential buyers to purchase the vacant homes by offering special mortgages with low interest rates for the first five years.

Which of the following, if true, provides the strongest indication that the plan recommended by the community spokesperson is not likely to achieve its goal?

(A) Many of the town's residents have lived in the area for over 20 years and will not want to leave their homes, despite falling property values. -This is the opposite of the premise. The residents will leave irrespective of the # of years they have spent in their homes.
(B) There are several other ways to prevent panicked residents from leaving town besides offering special mortgages. -This is a fact set.
(C) Crime rates have risen significantly since the recent surge of foreclosures, making the town a less desirable place to live. -Correct. If the town becomes unsafe, no plan will work.
(D) Low interest rates will likely attract some buyers who would be unable to make their mortgage payments once the interest rate goes up after the first five years. -The banks should take care of such people who won't be able to pay post the increment in the interest rate. Also, there will always be some people who will not be able to repay the loan properly.
(E) In order to subsidize the special mortgages offered by lenders as part of the plan, the town would have to cut funding for many community programs. -Out of scope
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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16 Sep 2017, 02:08
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I have interpretation for choice E. If the town will cut funding for many problems, this will affect the community service and hence make less desirable. Why people should buy home in a town that is poor in service? While the town will subsidize the price, it will lower quality of life.

Where did I go wrong?

Thanks
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Re: QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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26 Sep 2017, 08:45
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Mo2men wrote:
I have interpretation for choice E. If the town will cut funding for many problems, this will affect the community service and hence make less desirable. Why people should buy home in a town that is poor in service? While the town will subsidize the price, it will lower quality of life.

Where did I go wrong?

Thanks

This is a good point. Cutting funding for many community programs could also lower the quality of life. But remember that we are looking for an answer choice that provides the strongest indication that the plan is not likely to achieve its goal. Also, we do not know how much the funding for such programs would have to be cut. Perhaps the programs will not be significantly affected by the funding cuts.

So, which sounds like a stronger reason to leave town: a significant rise in crime rates or an unspecified decrease in funding for community programs? Although the latter might contribute to the problem, choice (C) is a better answer.

Great question!
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QOTD: As a result of a recent surge of foreclosures,  [#permalink]

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26 Sep 2017, 08:55
GMATNinja wrote:
Mo2men wrote:
I have interpretation for choice E. If the town will cut funding for many problems, this will affect the community service and hence make less desirable. Why people should buy home in a town that is poor in service? While the town will subsidize the price, it will lower quality of life.

Where did I go wrong?

Thanks

This is a good point. Cutting funding for many community programs could also lower the quality of life. But remember that we are looking for an answer choice that provides the strongest indication that the plan is not likely to achieve its goal. Also, we do not know how much the funding for such programs would have to be cut. Perhaps the programs will not be significantly affected by the funding cuts.

So, which sounds like a stronger reason to leave town: a significant rise in crime rates or an unspecified decrease in funding for community programs? Although the latter might contribute to the problem, choice (C) is a better answer.

Great question!

Thanks GMATNinja

After taking a closer look of the 2 options based on your view, I totally agree with you. SIGNIFICANT crime will be more inferior.

Thanks for the kudos
QOTD: As a result of a recent surge of foreclosures, &nbs [#permalink] 26 Sep 2017, 08:55
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