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Some economists view the Kennedy-Johnson tax cut of 1964, which radica

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Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 05:46
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Some economists view the Kennedy-Johnson tax cut of 1964, which radically reduced corporate and individual taxes, as the impetus for the substantial prosperity enjoyed by the United States in the late 1960's and early 1970's.

Which of the following, if true, would most weaken the claim that the tax cut of 1964 was the impetus for economic prosperity?

(A) Modernized, more productive factories were built in the late 1960's as a result of the funds made available by the tax cut.
(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960's.
(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive investments.
(D) Personal income after taxes rose in the years following 1964.
(E) In the late 1960's, unemployment was relatively low compared with the early 1960's.
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 06:32
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Tax cuts --> Reduced corporate and individual taxes --> Economic Prosperity

A, C and D state that tax cuts led to economic prosperity - Eliminate A, C and D

Between B and E:
(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960's. - Correct

(E) In the late 1960's, unemployment was relatively low compared with the early 1960's. - Incorrect - Relatively low unemployment may not result in substantial prosperity.

Answer: B
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 06:44
E is irrelevant to the content of the passage. A,C,E directly strengthens the claim. so B is undoubtedly the answer
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 06:54
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paidlukkha wrote:
Some economists view the Kennedy-Johnson tax cut of 1964, which radically reduced corporate and individual taxes, as the impetus for the substantial prosperity enjoyed by the United States in the late 1960's and early 1970's.

Which of the following, if true, would most weaken the claim that the tax cut of 1964 was the impetus for economic prosperity?

(A) Modernized, more productive factories were built in the late 1960's as a result of the funds made available by the tax cut.
(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960's.
(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive investments.
(D) Personal income after taxes rose in the years following 1964.
(E) In the late 1960's, unemployment was relatively low compared with the early 1960's.


KJ tax cut (reduced corporate and individual taxes ) = impetus for prosperity in the late 1960's and early 1970's.

This is a weaken question and Power Score states that correct answer to a weaken question must : -

1. Attack the premises on which the argument rests
2. Correct answer will undermine the conclusion but it must not contradict the conclusion
3. Answers that attacks the assumption
4. Attack Necessary condition , showing that the necessary condition does not need to occur for sufficient condition to occur


Now check the options -

(A) Modernized, more productive factories were built in the late 1960's as a result of the funds made available by the tax cut.

Strengthens the conclusion ; It suggests that the KJ tax cut led to availability of funds that resulted in building more production factories.

(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960's.

Suggests that KJ tax cut , but another factor led to the increased demand for United States manufactured goods leading to prosperity.

This option clearly attacks the premises on which the argument rests , hence this is the correct answer.

(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive investments.

Strengthening the argument as in (A)

(D) Personal income after taxes rose in the years following 1964.

If tax rates are cut then post tax income is bound to rise , irrelevant....

(E) In the late 1960's, unemployment was relatively low compared with the early 1960's.

Irrelevant , unemployment has no role here...


Hence correct answer must be (B) :-D :lol:
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 09:58
Vyshak vishnu440 Abhishek009
since this is a weaken question, I can get some outside info or understanding.
My contenders were B & E, but in an ideal situation, if unemployment is low, economy prospers.

What am I missing?
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 10:11
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paidlukkha wrote:
Vyshak vishnu440 Abhishek009
since this is a weaken question, I can get some outside info or understanding.
My contenders were B & E, but in an ideal situation, if unemployment is low, economy prospers.

What am I missing?


Happy to respond....

Option (E) states -

(E) In the late 1960's, unemployment was relatively low compared with the early 1960's.

But the stimulus talks about prosperity in the late 1960's and early 1970's.

Option (E) doesn't consider the condition in early 1970's.

However if you neglect it and consider option (E) critically then the sequence can be something like this -

KJ tax cut (reduced corporate and individual taxes ) ==> Reduced Unemployment ==> Impetus for prosperity in the late 1960's and early 1970's.


This in a way I feel option (E) strengthens the argument stating that the Tax cuts enabled corporations to open the doors for employment and workers and reduced taxes coupled with reduced individual taxes resulted in economic prosperity in the country...

Hence IMHO (B) :lol:
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 10:22
paidlukkha wrote:
Vyshak vishnu440 Abhishek009
since this is a weaken question, I can get some outside info or understanding.
My contenders were B & E, but in an ideal situation, if unemployment is low, economy prospers.

What am I missing?


Hi,

Your view is that tax cuts did not lead to economic prosperity, rather low unemployment led to economic prosperity.

There is a lot of ambiguity around E. We don't know how exactly unemployment influences economic prosperity.

Let's assume a situation:
In early 1960's: unemployment = 100; Employed = 900; Salary per employee = 1000 --> Prosperity = Spending power = 900,000
In late 1960's: unemployment = 10; Employed = 990; Salary per employee = 100 --> Prosperity = Spending power = 99,000

As you can see low unemployment did not result in substantial prosperity.
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 19 May 2016, 11:34
paidlukkha wrote:
Some economists view the Kennedy-Johnson tax cut of 1964, which radically reduced corporate and individual taxes, as the impetus for the substantial prosperity enjoyed by the United States in the late 1960's and early 1970's.

Which of the following, if true, would most weaken the claim that the tax cut of 1964 was the impetus for economic prosperity?

(A) Modernized, more productive factories were built in the late 1960's as a result of the funds made available by the tax cut.
(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960's.
(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive investments.
(D) Personal income after taxes rose in the years following 1964.
(E) In the late 1960's, unemployment was relatively low compared with the early 1960's.


Conclusion- Tax cut was the reason for substantial prosperity enjoyed by USA.

We have to weaken the conclusion either by attacking cause a effect or by showing another reason for the prosperity.

(A) Modernized, more productive factories were built in the late 1960's as a result of the funds made available by the tax cut. Because of tax cuts, productive factories were built. Doesn't weaken that tax cut was not the reason for prosperity.
(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960's. It gives an alternative reason that increased demand for USA manufactured products increased in Europe and Japan. Due to the increased demand consumption of USA products might have increased, resulting in prosperity.
(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive investments. Ok, but it doesn't provide answer to the question if tax cut was the reason for prosperity.
(D) Personal income after taxes rose in the years following 1964. So what?
(E) In the late 1960's, unemployment was relatively low compared with the early 1960's. Ok, so prosperity incresed due to lowered income tax?
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 17 Aug 2016, 05:28
Conclusion: Tax cuts--->increase in prosperity.
This is a cause-effect
Prephrasing answer choices: may be something other than tax cuts caused prosperity.
(A) Modernized, more productive factories were built in the late 1960's as a result of the funds made available by the tax cut.

indirectly stengthening


(B) Improved economic conditions in Western Europe and Japan resulted in substantially increased demand for United States manufactured goods in the late 1960's.

Independent of taxes. sounds good.


(C) The tax cut of 1964 contained regulations concerning tax shelters that prompted investors to transfer their savings to more economically productive INVESTMENTS.

tax cut regulations->more investments. again partial strengthener


(D) Personal income after taxes rose in the years following 1964.
related to taxes.

related to lower taxes(again strengthening)



(E) In the late 1960's, unemployment was relatively low compared with the early 1960's.

Out of scope
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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