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shwetachauhan
Joined: 17 May 2017
Last visit: 19 May 2017
Posts: 17
Given Kudos: 67
Schools: IIMA PGPX"18 IE Sept "18 HEC Dec '17
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18 May 2017, 08:43
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
65% (02:23) correct
35%
(02:29)
wrong
based on 704
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Some of the most prosperous nations in the world have experienced a pronounced drop in national savings rates—the percentage of after-tax income an average household saves. This trend will undoubtedly continue if the average age of these nations’ populations continues to rise, since older people have fewer reasons to save than do younger people.
Which one of the following indicates an error in the reasoning leading to the prediction above?
(A) It fail to specify the many reasons younger people have for saving money, and it fails to identify which of those reasons is the strongest.
(B) It assumes that a negative savings rate—the result of the average household’s spending all of its after-tax income as well as some of its existing savings—cannot ever come about in any nation.
(C) It fails to cite statistics showing that the average age of the population of certain nations is rising.
(D) It only takes into account the comparative number of reasons older and younger people, respectively, have for saving, and not the comparative strength of those reasons.
(E) It uses after-tax income as the base for computing the national savings rate without establishing by argument that after-tax income is a more appropriate base than before-tax income.
Which one of the following indicates an error in the reasoning leading to the prediction above?
(A) It fail to specify the many reasons younger people have for saving money, and it fails to identify which of those reasons is the strongest.
(B) It assumes that a negative savings rate—the result of the average household’s spending all of its after-tax income as well as some of its existing savings—cannot ever come about in any nation.
(C) It fails to cite statistics showing that the average age of the population of certain nations is rising.
(D) It only takes into account the comparative number of reasons older and younger people, respectively, have for saving, and not the comparative strength of those reasons.
(E) It uses after-tax income as the base for computing the national savings rate without establishing by argument that after-tax income is a more appropriate base than before-tax income.
01 Mar 2021, 03:30
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shwetachauhan
Some of the most prosperous nations in the world have experienced a pronounced drop in national savings rates—the percentage of after-tax income an average household saves. This trend will undoubtedly continue if the average age of these nations’ populations continues to rise, since older people have fewer reasons to save than do younger people.
Which one of the following indicates an error in the reasoning leading to the prediction above?
(A) It fail to specify the many reasons younger people have for saving money, and it fails to identify which of those reasons is the strongest.
(B) It assumes that a negative savings rate—the result of the average household’s spending all of its after-tax income as well as some of its existing savings—cannot ever come about in any nation.
(C) It fails to cite statistics showing that the average age of the population of certain nations is rising.
(D) It only takes into account the comparative number of reasons older and younger people, respectively, have for saving, and not the comparative strength of those reasons.
(E) It uses after-tax income as the base for computing the national savings rate without establishing by argument that after-tax income is a more appropriate base than before-tax income.
Which one of the following indicates an error in the reasoning leading to the prediction above?
(A) It fail to specify the many reasons younger people have for saving money, and it fails to identify which of those reasons is the strongest.
(B) It assumes that a negative savings rate—the result of the average household’s spending all of its after-tax income as well as some of its existing savings—cannot ever come about in any nation.
(C) It fails to cite statistics showing that the average age of the population of certain nations is rising.
(D) It only takes into account the comparative number of reasons older and younger people, respectively, have for saving, and not the comparative strength of those reasons.
(E) It uses after-tax income as the base for computing the national savings rate without establishing by argument that after-tax income is a more appropriate base than before-tax income.
Official Explanation
It is unwarranted to assume that older people’s reasons for saving are as compelling as those of younger people. Older people may have stronger reasons to save. For example, in their youth they may have learned the folly of not saving, or they may be more aware of the need for a retirement fund. The answer is (D).
General Discussion
20 May 2017, 10:10
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(A) It fail to specify the many reasons younger people have for saving money, and it fails to identify which of those reasons is the strongest. -- We do not really care about the quality of the reasons. Even if this were true, saying that the reason is not good enough does not help in pointing out an error.
(B) It assumes that a negative savings rate—the result of the average household’s spending all of its after-tax income as well as some of its existing savings—cannot ever come about in any nation. -- Completely out of scope. Lets say there can be a negative rate - Great! - Lets also say there cant be one - Great! - Does it really matter?
(C) It fails to cite statistics showing that the average age of the population of certain nations is rising. We believe everything that is there in the question stem.
(D) It only takes into account the comparative number of reasons older and younger people, respectively, have for saving, and not the comparative strength of those reasons. - CORRECT - It clearly says that the NUMBER of reasons to save is less for elder people. Lets say healthcare is costly - this alone could mean they save 100 and a young person would save only 30. Thus there is an apparent flaw.
(E) It uses after-tax income as the base for computing the national savings rate without establishing by argument that after-tax income is a more appropriate base than before-tax income. - Nonsensical statement.
(B) It assumes that a negative savings rate—the result of the average household’s spending all of its after-tax income as well as some of its existing savings—cannot ever come about in any nation. -- Completely out of scope. Lets say there can be a negative rate - Great! - Lets also say there cant be one - Great! - Does it really matter?
(C) It fails to cite statistics showing that the average age of the population of certain nations is rising. We believe everything that is there in the question stem.
(D) It only takes into account the comparative number of reasons older and younger people, respectively, have for saving, and not the comparative strength of those reasons. - CORRECT - It clearly says that the NUMBER of reasons to save is less for elder people. Lets say healthcare is costly - this alone could mean they save 100 and a young person would save only 30. Thus there is an apparent flaw.
(E) It uses after-tax income as the base for computing the national savings rate without establishing by argument that after-tax income is a more appropriate base than before-tax income. - Nonsensical statement.
