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# Spending on research and development by United States

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Spending on research and development by United States  [#permalink]

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Updated on: 04 Jul 2013, 08:46
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Question Stats:

66% (01:50) correct 34% (01:58) wrong based on 1920 sessions

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Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

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Originally posted by ykaiim on 08 May 2010, 04:35.
Last edited by Zarrolou on 04 Jul 2013, 08:46, edited 1 time in total.
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Re: Spending on research and development by United States  [#permalink]

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04 Jul 2013, 01:12
6
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jaituteja wrote:
ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

Can someone explain b/w C and D??

as per the argument.... tax credit ---> little or nothing to boost the spending on RnD

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
If tax credit are higher than 25%, then spending would have increased.. this states that the current 25% is not sufficient enough to boost.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.
Let us assume if there are no tax credit, then the little boost that happened would be minimized..... So, the business spending would have been lower...

this is not what D states...

I prefer C over D...
But OA is D..

Please let me know whats wrong in my explanations.... !! Thanks in advance..!!

Hi Jaituteja.

Frankly, this one is tough. D is correct.

ANALYZE THE STIMULUS:
(I will reorganize the stimulus to help you see the logic clearly.)

Fact: Spending for RnD: 1980 ==> 1982 increased 16.4
Fact: Spending for RnD: 1983 ==> 1984 increased 8%
Fact: Spending for RnD actually increased, BUT followed a downward trend (the increase of the next year is less than the increase of the last year, and so on….)
Conclusion: the 25 % tax credit enacted by Congress in 1981 did little or nothing to stimulate such spending.

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.
Wrong. If the spending on RnD in 1985 increases 8.2% ==> NOT the downward trend, because the increase in 1984 was only 8%, hence The 25% tax credit helps to stimulate RnD spending. The conclusion fails.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
Wrong. TEMPTING. But it’s wrong.
Drink 1 cup of Coke does not help me eat more.
Correct Assumption is: If I don’t drink 1 cup of Coke, I will not eat less.
Because if NO coke, I eat less than I eat with Coke, it means Coke actually help me eat more.
The wrong assumption is: drink 2 cup of Coke help me eat more. Because we just want to compare “drink 1 coke” VS “No Coke” to see whether drink 1 cup of coke help me eat more?.

The similar logic in C, we just want to compare the effect of “25% tax credit” vs “no tax credit” to make a conclusion whether the 25% tax credit actually helps?

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.
Correct. This is exactly my example in C. The conclusion is: the 25% tax credit did not help stimulate spending on RnD. The assumption must be: If NO 25% tax credit, Spending NOT LESS than it was.
Use Negation technique: If No 25% tax credit, Spending LESS than it was ==> It means the 25% tax credit DID HELP. ==> conclusion fails

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.
Wrong. Out of scope for sure. Nothing about “specific investment”

Hope it helps.
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##### General Discussion
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Re: Spending on research and development in US  [#permalink]

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08 May 2010, 09:27
I couldn't figure out the answer in under two minutes and hurredly guessed C.

(A) Business spending on research and development is usually directly proportional to business profits. [NO - introduces a new piece of unconnected unformation, which is business profits]

(B) Business spending for research and development in 1985 could not increase by more than 8.3%. [NO - the rate in 1985 is 8%. 8.3% doesn't provide a related justification for the increased spending. it may provide partial justification if it were 8%]

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did. [ bingo - any justification for the increase should be sufficient to make the argument hold water]

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.
[ NO - reinforces the argument that the tax credit didn't affect R&D spending]
(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.
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Re: Spending on research and development in US  [#permalink]

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08 May 2010, 11:49
1
1
ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

Conclusion : Tax credit didn't affected the spending..!!

IMHO Only C and D discuss the issue at hand.

Finally C: It means that "even 25% tax credit affected" the business spending...If tax credits would have been more, spending would have increased...!!
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Re: Spending on research and development in US  [#permalink]

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09 May 2010, 01:07
ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

My take 'D'. 'C' is unsure as argument says 25 % tax credit "did little or nothing" to stimulate such spending. We cant say if 25pc tax credit would have increased spending more than it did.

'D' seem better than 'C. in absence of tax credit govt spending would not be substantially lower

Wats OA??
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Re: Spending on research and development in US  [#permalink]

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09 May 2010, 04:09
2
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ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

IMO D. the conclusion says tax credit did not have almost any effect on RnD. To this hold true, assumption has to tell that in absence of tax credit the behaviour of comapnies toward Rnd would be same.
and D says it all
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Re: Spending on research and development in US  [#permalink]

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22 May 2010, 09:57
Even i'll go with D ... will post explanation after OA has been announced(just to be sure of my reasoning ) ..
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Re: Spending on research and development in US  [#permalink]

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23 May 2010, 09:03
ashnag wrote:
ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

IMO D. the conclusion says tax credit did not have almost any effect on RnD. To this hold true, assumption has to tell that in absence of tax credit the behaviour of comapnies toward Rnd would be same.
and D says it all

The argument says we need to prove the 25% tax credit did little or nothing .
In C it proves that there was little effect but it could have been more.
In D it says there was no effect of 25% tax credit since in its absence spending would not have been substantially lower than it was.

If it seem illogical please explain.
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Re: Spending on research and development in US  [#permalink]

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24 May 2010, 19:33
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Mohit .. we need an assumption ... assumptions always support the conclusion .... so if we negate the assumption the entire argument (along with conclusion) will fall out.
Now, please read both C and D and see which supports the conclusion "the 25 percent tax credit did little or nothing to stimulate such spending."
Clearly D supports it as it shows that the 25% Tax credit doesn't has any effect.

Now to test D .. just negate it. Read it as "In the absence of the 25% tax credit, business spending for research and development after 1981 would [strike]not[/strike] have been substantially lower than it was."
Now this shows that our 25% Tax credit had some effect. this is opposite to our conclusion. Hence this is the right answer.

Hope it is clear else I'll explain it in a clearer manner.
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Re: Spending on research and development in US  [#permalink]

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25 May 2010, 06:00
Acc3ss wrote:
Mohit .. we need an assumption ... assumptions always support the conclusion .... so if we negate the assumption the entire argument (along with conclusion) will fall out.
Now, please read both C and D and see which supports the conclusion "the 25 percent tax credit did little or nothing to stimulate such spending."
Clearly D supports it as it shows that the 25% Tax credit doesn't has any effect.

Now to test D .. just negate it. Read it as "In the absence of the 25% tax credit, business spending for research and development after 1981 would [strike]not[/strike] have been substantially lower than it was."
Now this shows that our 25% Tax credit had some effect. this is opposite to our conclusion. Hence this is the right answer.

Hope it is clear else I'll explain it in a clearer manner.

@acc3ss

Thanks for taking pain to explain me !!!!

Since in D we are taking about the absence of Tax Credit. I feel by no means it call tell us the was there any effect of Tax at all if impemented. Even if you negate the statement then also the statement explains you the effect of the absence of Tax Credit.

I am not convinced. Please explain how such questions should be tackled.
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Re: Spending on research and development in US  [#permalink]

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31 May 2010, 15:09
I would pick (D). what is the OA?
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Re: Spending on research and development by United States  [#permalink]

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30 Jun 2013, 04:38
its clearly D.

from the last sentence of the argument " Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending"

So if the tax credit is absent it wont helps,,what is mentioned in D.
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Re: Spending on research and development by United States  [#permalink]

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02 Jul 2013, 23:03
2
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A Very good question...i must agree i have to reread the question 2-3 times...the figures really bugged me up

ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

So basically the trend is there is a decrease in the "increase in expenses in RnD ".. the autor is claiming that the 25% tax credit was not fruitful in promoting as expected...

We are looking for an assumption ... the author assumes if there was no tax credit then the results would have been the same

ykaiim wrote:
(A) Business spending on research and development is usually directly proportional to business profits.

ykaiim wrote:
(B) Business spending for research and development in 1985 could not increase by more than 8.3%.
We are telling whatever it may be the value would have been no better -- it is basically weakening

ykaiim wrote:
(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
as he is claiming the impact is negligible, so this claim actually is not the assumption

ykaiim wrote:
(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

CORRECT-the author assumes if there was no tax credit then the results would have been the same

ykaiim wrote:
(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.
This is a conclusion that can be drawn but not an assumption on which my argument lies
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Re: Spending on research and development by United States  [#permalink]

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03 Jul 2013, 23:09
ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

Can someone explain b/w C and D??

as per the argument.... tax credit ---> little or nothing to boost the spending on RnD

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
If tax credit are higher than 25%, then spending would have increased.. this states that the current 25% is not sufficient enough to boost.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.
Let us assume if there are no tax credit, then the little boost that happened would be minimized..... So, the business spending would have been lower...

this is not what D states...

I prefer C over D...
But OA is D..

Please let me know whats wrong in my explanations.... !! Thanks in advance..!!
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Re: Spending on research and development by United States  [#permalink]

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04 Jul 2013, 03:08
I have looked up the official answer. It is D
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Spending on research and development by United States  [#permalink]

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05 Aug 2014, 22:25
pqhai wrote:
jaituteja wrote:
ykaiim wrote:
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.

Can someone explain b/w C and D??

as per the argument.... tax credit ---> little or nothing to boost the spending on RnD

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
If tax credit are higher than 25%, then spending would have increased.. this states that the current 25% is not sufficient enough to boost.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.
Let us assume if there are no tax credit, then the little boost that happened would be minimized..... So, the business spending would have been lower...

this is not what D states...

I prefer C over D...
But OA is D..

Please let me know whats wrong in my explanations.... !! Thanks in advance..!!

Hi Jaituteja.

Frankly, this one is tough. D is correct.

ANALYZE THE STIMULUS:
(I will reorganize the stimulus to help you see the logic clearly.)

Fact: Spending for RnD: 1980 ==> 1982 increased 16.4
Fact: Spending for RnD: 1983 ==> 1984 increased 8%
Fact: Spending for RnD actually increased, BUT followed a downward trend (the increase of the next year is less than the increase of the last year, and so on….)
Conclusion: the 25 % tax credit enacted by Congress in 1981 did little or nothing to stimulate such spending.

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.
Wrong. If the spending on RnD in 1985 increases 8.2% ==> NOT the downward trend, because the increase in 1984 was only 8%, hence The 25% tax credit helps to stimulate RnD spending. The conclusion fails.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
Wrong. TEMPTING. But it’s wrong.
Drink 1 cup of Coke does not help me eat more.
Correct Assumption is: If I don’t drink 1 cup of Coke, I will not eat less.
Because if NO coke, I eat less than I eat with Coke, it means Coke actually help me eat more.
The wrong assumption is: drink 2 cup of Coke help me eat more. Because we just want to compare “drink 1 coke” VS “No Coke” to see whether drink 1 cup of coke help me eat more?.

The similar logic in C, we just want to compare the effect of “25% tax credit” vs “no tax credit” to make a conclusion whether the 25% tax credit actually helps?

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.
Correct. This is exactly my example in C. The conclusion is: the 25% tax credit did not help stimulate spending on RnD. The assumption must be: If NO 25% tax credit, Spending NOT LESS than it was.
Use Negation technique: If No 25% tax credit, Spending LESS than it was ==> It means the 25% tax credit DID HELP. ==> conclusion fails

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.
Wrong. Out of scope for sure. Nothing about “specific investment”

Hope it helps.

I agree that D is the right choice but just to fine-tune my negation skills , how would you apply the same in C and get it wrong.

My understanding is : -

C states -Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
Negative C -- > Had/Even the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would NOT have increased more than it did.

now negative C states that even if the tax credit had increased more than 25 % , business spending would not have increased. This does not negate the conclusion that the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending. It talks of a different slab so it is possible that till tax credit limit of 25% , it enhanced the spending and then the physical limit of the expenditure set in and so any more credit was simply unable to give any benefit.

Can you please comment on my thought process ? Is it right or am I tweaking my understanding after the knowing the answer to be able to justify the wrong options ?
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Spending on research and development by United States  [#permalink]

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29 Jun 2015, 21:16
1
1
Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

Premise 1) : Spending on R&D for 1984 showed increase over 1983.
Premise 2) : Spending on R&D for 1981 showed decrease over 1980.
Conclusion : 25% tax credit didn't help.

Assumption is required to support the conclusion.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.
This option is a general observation and it is not affecting the conclusion.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.
1985 is not in the context of the argument

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.
This option says that if tax credit is > 25%, the spending will be > the actually observed spending.
But the context is we need a option which says 25% tax credit didn't affect the spending at all or affected by a small margin.
Hence it is the close option but incorrect option

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.
This option says that if 25% tax credit is removed, the affect wouldn't be much. So the 25% has no impact on the spending and that is the assumption of the argument - Correct

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.
Tax credit markets is out of the scope of the argument
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Re: Spending on research and development by United States  [#permalink]

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18 Jan 2016, 04:50
Clear D , none of the other options are not even close . doesnt look like a 700 question
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Re: Spending on research and development by United States  [#permalink]

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12 Jun 2016, 01:54
This is a cheap question disguised in a lot of mumbo jumbo.
The question is asking :- "The conclusion of the argument above cannot be true unless which of the following is true"?
In other words :- IF THIS OPTIONS IS TRUE, THEN THE CONCLUSION IS ALSO TRUE.
So now first we have to isolate the conclusion and then look for a matching options.

Lets quickly simplify the premise and conclusion. The language is only a close approximation but good enough to understand the argument

Premise 1 ) In 1981 Congress gave 25% tax concession to companies to increase their research budget
Premise 2) But after 1981, Research budget started decreasing. (reverse of what was expected happened)

Conclusion) Congresss' 25% tax concession DID NOT lured companies to increase their research budget.

In other words===> This tax concession had no dramatic effect on research budget.

D) is saying exactly that :-In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was. -- or we can rephrase -- (EVEN if there was no tax 25 % concession, there would be little difference in companies research budget)

Spending on research and development by United States businesses for 1984 showed an increase of about 8 percent over the 1983 level. This increase actually continued a downward trend evident since 1981 – when outlays for research and development increased 16.4 percent over 1980 spending. Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments.
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Re: Spending on research and development by United States  [#permalink]

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26 Jul 2018, 18:31
Premise:
1984 showed an increase of about 8 percent over the 1983 level.
1981 – when outlays for research and development increased 16.4 percent over 1980 spending.
Clearly between these two there is a downward trend 16.4 to 8%

Conclusion:
Clearly, the 25 percent tax credit enacted by Congress in 1981, which was intended to promote spending on research and development, did little or nothing to stimulate such spending.

Pre-think:
This is an assumption question.
1. Tax in 1981 was introduced to stimulate such spending

The conclusion of the argument above cannot be true unless which of the following is true?

(A) Business spending on research and development is usually directly proportional to business profits. --- business profits is not in scope.

(B) Business spending for research and development in 1985 could not increase by more than 8.3%. --- again 1985 is not in out scope.

(C) Had the 1981 tax credit been set higher than 25%, business spending for research and development after 1981 would have increased more than it did. --- May be this is true, but again this situation has nothing to do with our case.

(D) In the absence of the 25% tax credit, business spending for research and development after 1981 would not have been substantially lower than it was.--- this choice is saying that if this tax was not there then we would have done better in stimulating the spendings. definitely supporting the conclusion. Also its negation is breaking the conclusion. Must be the answer.

(E) Tax credits market for specific investments are rarely effective in inducing businesses to make those investments. --- I dont understand what this choice is saying, but Tax credit market is not in our scope ans i dnt know what it is .
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Simple strategy:
“Once you’ve eliminated the impossible, whatever remains, however improbable, must be the truth.”

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Re: Spending on research and development by United States &nbs [#permalink] 26 Jul 2018, 18:31

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