It is currently 18 Oct 2017, 23:02

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

# Spending on research and development by United States

Author Message
TAGS:

### Hide Tags

Director
Joined: 25 Aug 2007
Posts: 927

Kudos [?]: 1504 [4], given: 40

WE 1: 3.5 yrs IT
WE 2: 2.5 yrs Retail chain
Spending on research and development by United States [#permalink]

### Show Tags

08 May 2010, 05:35
4
KUDOS
20
This post was
BOOKMARKED
00:00

Difficulty:

55% (hard)

Question Stats:

62% (01:51) correct 38% (02:01) wrong based on 1538 sessions

### HideShow timer Statistics

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.
[Reveal] Spoiler: OA

_________________

Tricky Quant problems: http://gmatclub.com/forum/50-tricky-questions-92834.html
Important Grammer Fundamentals: http://gmatclub.com/forum/key-fundamentals-of-grammer-our-crucial-learnings-on-sc-93659.html

Last edited by Zarrolou on 04 Jul 2013, 09:46, edited 1 time in total.

Kudos [?]: 1504 [4], given: 40

Intern
Joined: 08 May 2010
Posts: 10

Kudos [?]: [0], given: 1

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

### Show Tags

08 May 2010, 10:27
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.

Kudos [?]: [0], given: 1

Senior Manager
Joined: 24 Jul 2009
Posts: 287

Kudos [?]: 167 [1], given: 0

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

### Show Tags

08 May 2010, 12:49
1
KUDOS
1
This post was
BOOKMARKED
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...!!

Kudos [?]: 167 [1], given: 0

Manager
Joined: 11 Mar 2010
Posts: 74

Kudos [?]: 41 [0], given: 1

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

### Show Tags

09 May 2010, 02:07
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??

Kudos [?]: 41 [0], given: 1

Intern
Joined: 15 Mar 2010
Posts: 18

Kudos [?]: 3 [2], given: 4

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

### Show Tags

09 May 2010, 05:09
2
KUDOS
1
This post was
BOOKMARKED
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

Kudos [?]: 3 [2], given: 4

Manager
Joined: 28 Jul 2009
Posts: 120

Kudos [?]: 33 [0], given: 12

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

### Show Tags

22 May 2010, 10:57
Even i'll go with D ... will post explanation after OA has been announced(just to be sure of my reasoning ) ..

Kudos [?]: 33 [0], given: 12

Manager
Joined: 22 Jun 2007
Posts: 72

Kudos [?]: 6 [0], given: 1

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

### Show Tags

23 May 2010, 10:03
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.

Kudos [?]: 6 [0], given: 1

Manager
Joined: 28 Jul 2009
Posts: 120

Kudos [?]: 33 [1], given: 12

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

### Show Tags

24 May 2010, 20:33
1
KUDOS
1
This post was
BOOKMARKED
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.

Kudos [?]: 33 [1], given: 12

Manager
Joined: 22 Jun 2007
Posts: 72

Kudos [?]: 6 [0], given: 1

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

### Show Tags

25 May 2010, 07:00
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.

Kudos [?]: 6 [0], given: 1

VP
Joined: 17 Feb 2010
Posts: 1476

Kudos [?]: 756 [0], given: 6

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

### Show Tags

31 May 2010, 16:09
I would pick (D). what is the OA?

Kudos [?]: 756 [0], given: 6

Director
Joined: 25 Aug 2007
Posts: 927

Kudos [?]: 1504 [0], given: 40

WE 1: 3.5 yrs IT
WE 2: 2.5 yrs Retail chain
Re: Spending on research and development in US [#permalink]

### Show Tags

31 May 2010, 21:45
OA is D. This is from OG10.
_________________

Tricky Quant problems: http://gmatclub.com/forum/50-tricky-questions-92834.html
Important Grammer Fundamentals: http://gmatclub.com/forum/key-fundamentals-of-grammer-our-crucial-learnings-on-sc-93659.html

Kudos [?]: 1504 [0], given: 40

Senior Manager
Joined: 02 Mar 2012
Posts: 360

Kudos [?]: 89 [0], given: 4

Schools: Schulich '16
Re: Spending on research and development by United States [#permalink]

### Show Tags

30 Jun 2013, 05:38
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.

Kudos [?]: 89 [0], given: 4

Manager
Joined: 27 Jul 2011
Posts: 183

Kudos [?]: 287 [2], given: 103

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

### Show Tags

03 Jul 2013, 00:03
2
KUDOS
1
This post was
BOOKMARKED
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
_________________

If u can't jump the 700 wall , drill a big hole and cross it .. I can and I WILL DO IT ...need some encouragement and inspirations from U ALL

Kudos [?]: 287 [2], given: 103

Manager
Joined: 21 Aug 2012
Posts: 148

Kudos [?]: 71 [0], given: 41

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

### Show Tags

04 Jul 2013, 00:09
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..!!
_________________

MODULUS Concept ---> http://gmatclub.com/forum/inequalities-158054.html#p1257636
HEXAGON Theory ---> http://gmatclub.com/forum/hexagon-theory-tips-to-solve-any-heaxgon-question-158189.html#p1258308

Kudos [?]: 71 [0], given: 41

Verbal Forum Moderator
Joined: 16 Jun 2012
Posts: 1127

Kudos [?]: 3478 [2], given: 123

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

### Show Tags

04 Jul 2013, 02:12
2
KUDOS
2
This post was
BOOKMARKED
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.
_________________

Please +1 KUDO if my post helps. Thank you.

"Designing cars consumes you; it has a hold on your spirit which is incredibly powerful. It's not something you can do part time, you have do it with all your heart and soul or you're going to get it wrong."

Chris Bangle - Former BMW Chief of Design.

Kudos [?]: 3478 [2], given: 123

Manager
Joined: 09 Jul 2012
Posts: 59

Kudos [?]: 15 [0], given: 29

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

### Show Tags

04 Jul 2013, 04:08
I have looked up the official answer. It is D

Kudos [?]: 15 [0], given: 29

GMAT Club Legend
Joined: 01 Oct 2013
Posts: 10118

Kudos [?]: 261 [0], given: 0

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

### Show Tags

30 Jul 2014, 15:15
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.

Kudos [?]: 261 [0], given: 0

Senior Manager
Joined: 28 Apr 2014
Posts: 273

Kudos [?]: 40 [0], given: 46

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

### Show Tags

05 Aug 2014, 23:25
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 ?

Kudos [?]: 40 [0], given: 46

Current Student
Joined: 03 Feb 2013
Posts: 942

Kudos [?]: 1056 [1], given: 548

Location: India
Concentration: Operations, Strategy
GMAT 1: 760 Q49 V44
GPA: 3.88
WE: Engineering (Computer Software)
Spending on research and development by United States [#permalink]

### Show Tags

29 Jun 2015, 22:16
1
KUDOS
1
This post was
BOOKMARKED
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
_________________

Thanks,
Kinjal

My Application Experience : http://gmatclub.com/forum/hardwork-never-gets-unrewarded-for-ever-189267-40.html#p1516961

Kudos [?]: 1056 [1], given: 548

Manager
Joined: 19 Nov 2014
Posts: 81

Kudos [?]: -13 [0], given: 57

Location: India
Concentration: Technology, General Management
Schools: ISB '18
WE: Information Technology (Computer Software)
Re: Spending on research and development by United States [#permalink]

### Show Tags

18 Jan 2016, 05:50
Clear D , none of the other options are not even close . doesnt look like a 700 question
_________________

KUDOS pls if you like My Post

Kudos [?]: -13 [0], given: 57

Re: Spending on research and development by United States   [#permalink] 18 Jan 2016, 05:50

Go to page    1   2    Next  [ 22 posts ]

Display posts from previous: Sort by