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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, 06:46
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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, 07:32
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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, 07:44
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, 07:54
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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, 10:58
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, 11:11
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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, 11:22
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, 12:34
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, 06:28
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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New post 16 Jun 2019, 02:22
AjiteshArun how do we know that the united states was in fact able to meet the increase in demand? There isn't any sort of linkage mentioned anywhere in the argument. Option b simply tells us that there was an increase in demand of the goods manufactured in the US.

Kindly help

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

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New post 16 Jun 2019, 06:08
how do we know that the united states was in fact able to meet the increase in demand? There isn't any sort of linkage mentioned anywhere in the argument. Option b simply tells us that there was an increase in demand of the goods manufactured in the US.

Kindly help GMATNinja

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

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New post 16 Jun 2019, 19:51
Hi Adit,

If an economy is enjoying "substantial prosperity", we can assume that it is meeting a higher level of demand. The question here is what led to that ability to meet a higher level of demand. Was it something domestic (a tax cut) or was it foreign trade?

The question tells us that the US enjoyed substantial prosperity in the late 1960s and early 1970s. This means that ~the US economy was doing well then. We know that increased demand could have been a reason for that. The question says that something ("the Kennedy-Johnson tax cut of 1964") that is capable of increasing demand (let's call it domestic demand) in the US was not the reason for the substantial prosperity mentioned in the question.

Option B gives us reason to believe that the 1964 tax cut was not the impetus for the prosperity by:
1. Giving us something else (an alternative, foreign demand) that could explain the substantial prosperity.
2. Moving the alternative much closer to where we want it: (a) tax cut 1964, (b) foreign demand late 1960s, and (c) substantial prosperity late 1960s and early 1970s.
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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 Jun 2019, 08:30
Option B points to outside factors that seem to be the reason for economic prosperity.

Hence, the arguments claiming a beneficial effect of the tax cut are weakened.
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica  [#permalink]

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New post 16 Jul 2019, 02:42
(A) Modernized, more productive factories were built in the late 1960s as a result of the funds made available by the tax cut.

Strengthens the conclusion; It suggests that the KJ tax cut led to the 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 the United States manufactured goods in the late 1960s.

Suggests that KJ tax cut, but another factor led to the increased demand for the 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 1960s, unemployment was relatively low compared with the early 1960s.

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 26 Sep 2019, 08:41
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.


We need to weaken the causality A-> B
A: Tax cuts
B: prosperity

How can we weaken: prove that
1)A did not cause B, something else caused it
or 2) B caused A
or 3) When A occurred, B did not follow, B was already present

A: Its a strengthener. Rejected
B: looks similar to 1). Contender
C: Its a strengthener. Rejected
D: Its a strengthener. Rejected
E: Looks similar to 1) but weak because less unemployment could have been caused by tax cuts. Rejected

IMO B is the correct 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 10 Oct 2019, 19:52
B is the only statement that provides an external factor that impacted the US economy. Everything else could plausibly come as a byproduct of the tax cuts.
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Re: Some economists view the Kennedy-Johnson tax cut of 1964, which radica   [#permalink] 10 Oct 2019, 19:52
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