Some of the most prosperous nations in the world have : GMAT Critical Reasoning (CR)
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# Some of the most prosperous nations in the world have

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Director
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Some of the most prosperous nations in the world have [#permalink]

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20 Jul 2004, 09:30
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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 fails 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.
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20 Jul 2004, 10:04
my ans ....

E ...shows the clear link and also helps us knw that there is no solid proof to say that after-Tax savings are the only way of measuring the savings rate...

hope that helps !

HavE fun
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20 Jul 2004, 10:44
I too lean towards E, but, I believe D is the best answer.

Quote:
(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.

the argument is that the trend will continue in future, but what if the reason that led to this trend are not effective in leading this in future? This is like a Sine curve, it on it's peak now, it may reaches the bottom in the future.

Quote:
(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.

appropriate or not, after-tax income provides the indication.
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20 Jul 2004, 17:49
Tough one. I see no flaw in the author's reasoning but I have to choose E for my ans.
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21 Jul 2004, 00:55
I think the answer should be D.

D says that even though elderly people may have few reasons to save money but these reasons may be very compelling and neccasary actually resulting in higher savings. This would identify the error in the reasoning.

>Amit
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21 Jul 2004, 02:36
D.
Saving rate is not just based on the average age ,there could be n number of other factors.

Can not be E as it does not matter after-tax or pre-tax for the trend to continue.If only, in one case you take after-tax and in another case pre-tax, tthat eould have impact.
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21 Jul 2004, 02:43
(D) is believe is the best among given choices.
21 Jul 2004, 02:43
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