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# The United States government uses only a household's cash

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The United States government uses only a household's cash [#permalink]

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02 Oct 2010, 11:05
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The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?

a ) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.

b) While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.

d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.

e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.
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Re: The United States government uses only a household's cash [#permalink]

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02 Oct 2010, 11:26
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Orange08 wrote:
The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?

a ) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.
Good candidate.

b) While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade
Out of scope.

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.
Good candidate.

d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.
Out of scope since this offers other methods to calculate the poverty line.

e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.
Out of scope since this options provides a cause for changing the government's calculation method.

To choose between option A and C

Looking closely, option A seems to in the wrong direction. The government calculation is based on the cash income and option A says that for 99% the yearly cash income is the majority of its disposable income and this means that the governments calculation here is correct. This option thus supports the governments calculation.

Option C wins.
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Re: The United States government uses only a household's cash [#permalink]

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02 Oct 2010, 11:35
Used POE to narrow down to A & E, and then picked E.

Maybe true, but does not show that the method needs to be altered. It is showing a fact. Just because the % is 99%, does not mean anything because for everyone they are considering yearly cash income a ) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.

Not relevant. The variation does not show we the method should be altered due to wrong underlying basis b) While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.

Out of scope to show that the current method needs to be changed c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.

Again not relevant d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.

Correct - the current system is counting people who are living off their assets as living below the poverty line because they did not have any income in a given year. In reality they are not living below poverty line coz they have money from assets, which are just not considered as income e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.
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Re: The United States government uses only a household's cash [#permalink]

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02 Oct 2010, 11:37
ezhilkumarank wrote:
Orange08 wrote:
The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?

a ) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.
Good candidate.

b) While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade
Out of scope.

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.
Good candidate.

d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.
Out of scope since this offers other methods to calculate the poverty line.

e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.
Out of scope since this options provides a cause for changing the government's calculation method.

To choose between option A and C

Looking closely, option A seems to in the wrong direction. The government calculation is based on the cash income and option A says that for 99% the yearly cash income is the majority of its disposable income and this means that the governments calculation here is correct. This option thus supports the governments calculation.

Option C wins.

IMO, C would be stretching it too far. Maybe the private sector research studies are wrong. You are letting your judgement be affected by outside knowledge. Just because it is a private sector research study does not mean it is correct.
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Re: The United States government uses only a household's cash [#permalink]

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02 Oct 2010, 20:15
Option E for me. As per PowerScore CR Bible the correct answer for the Must-Be-True question would be a rephrase of the stimulus given in the answer.

e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.

I would rule out C as it talks about people who are "truly living in poverty". I believe truly living in poverty is an ambiguous term which has not been qualified.

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.
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Re: The United States government uses only a household's cash [#permalink]

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03 Oct 2010, 07:25
1
Orange08 wrote:
a ) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income. -- This actualy weakens the contention

b) While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade -- This is irrelevant as we are not debating the results of the statistics
c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method. -- Strong Contender
d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.-- Irrelevant as it is too much to assume that what prominent economists endorse is gospel.
e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year. -- Another contender

Between C and E,
Option E - Rephrases the premise that Someone with no income inflow can still make hundreds of thousands of dollars ... basically it does not provide any new information.

For strengthen questions, the Answer choice must provide new evidence/information to support the conclusion.
Hence Option C is correct
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Re: The United States government uses only a household's cash [#permalink]

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03 Oct 2010, 10:58
Hey devashish, thats correct. For strengthen questions, the Answer choice must provide new evidence/information to support the conclusion.

I miss interpreted this question to be "Must be True" question but in fact its a strengthen question.
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Re: The United States government uses only a household's cash [#permalink]

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22 Apr 2012, 10:27
Can somebody explain the reasoning followed to eliminate E from race. I was confused between E and C and finally went for E

C is enticing because it exposes the discrepancy by pointing out statistics. I decided to forgo E because the research apparently adopted a technique that was different from the technique adopted by government. The argument does not talk about whether the research techniques are more enticing than government techniques.

E on the other hand points out a similar flaw that he argument has already pointed out, which is not counting individuals who did not earn that specific year into the taxable bucket.

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Re: The United States government uses only a household's cash [#permalink]

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09 Jul 2013, 14:15
1
Orange08 wrote:
The United States government uses only a household's cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household's disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in "poverty" because this income is not included in the calculation.

Which of the following, if true, validates the contention that the government's calculation methods must be altered in order to provide statistics that measure true poverty?

a ) For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household's disposable income.

b) While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade

c) Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.

d) Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.

e) The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.

HERE IS OE

The conclusion of the argument is that the government's calculation methods must be altered in order to provide statistics that measure true poverty. To support this position, the author first explains how the government’s method works and then introduces a hypothetical example that would return a "false positive" - that is, a person who has a large income, yet is classified by the government as living in poverty. One example, however, is generally not enough to invalidate an entire method; no method is perfect and there are always a few results that are not consistent with the overall conclusion. In order to validate, or strengthen, the conclusion, we need to show that the government’s method is fundamentally inferior to some alternative that would produce more valid results.

(A) This choice weakens the argument by minimizing the importance of the author's evidence (the hypothetical retiree with capital gains). According to this choice, the use of cash income to designate poverty levels is a very sound method because it provides valid results for more than 99% of those classified as living in poverty.

(B) This choice shows that the government’s method provided a wide range of results for the poverty rate over a certain period of time, but it is irrelevant to the argument at hand. It tells us nothing about whether the method provides relevant statistics in any given year.

(C) CORRECT. If this statement is true, then the government’s calculation method seems to overstate the number of people living in poverty, while the various private sector studies generally agree with each other that the number of people is lower. Thus, the methods used in the private sector are likely to be more valid than the government’s method, lending credence to the author's contention that the government’s method should change.

(D) Although this choice provides an example of people who might agree with the conclusion (several prominent economists), this choice provides no evidence that the alternate method they endorse would provide more relevant statistics than the government’s method.

(E) This choice adds another hypothetical example of how the current method could include someone in the poverty count who does not actually live in poverty. It does not, however, address whether there are other calculation methods that are more accurate than the government’s method.
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Re: The United States government uses only a household's cash [#permalink]

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25 Jul 2013, 01:50
I have read all the discussions, D still seems to be the better answer.

On what grounds can we confirm that irrigation gain is minimized to an extent that it will double the profit?
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CR Revision: The United States government uses only a household’s cash [#permalink]

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10 Jan 2016, 12:32
All the answer choices are wrong but C

C is the only way to counteract what the gov says, i.e its calculations to provide a reliable threshold are wrong
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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16 Jan 2016, 02:37
Any answer choice which says that the Government's calculation method is flawed and needs to be revised is the answer. "C" brings out a discrepancy. Established that means accepted research studies by private sectors indicates that the figure is less than the figure indicated by the Government's study. Since multiple studies made by the private sector give a different figure, there has to be some defect in the Government's calculation method and it ought to be revised. Hence the answer is "C".
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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23 Jan 2016, 11:33
souvik101990 wrote:
The United States government uses only a household’s cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household’s disposable income. For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in “poverty” because this income is not included in the calculation. Which of the following, if true, validates the contention that the government’s calculation methods must be altered in order to provide statistics that measure true poverty?

A. For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each
household’s disposable income.

B. While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method
indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.

C. Most established research studies conducted by the private sector indicate that the number of people truly living in
poverty in the U.S. is less than that indicated by the government’s calculation method.

D. Several prominent economists endorse an alternate calculation method which incorporates all income, not just
cash income, and adjusts for taxes paid and other core expenses.

E. The government’s calculation method also erroneously counts those who do not earn income in a given year but
who have substantial assets on which to live during that year.

This is a very good example why pre-thinking is necessary for CR questions.

After reading the question it should strike you that what you need is another answer choice which says that the govt calculation methods provide wrong stats.
A B definitely eliminated.
C satisfies our requirement. Correct.
D someone else endorses something. Wrong
E govt is erroneous in something. not satisfying.
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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10 Apr 2016, 20:04
Any answer choice which says that the Government's calculation method is flawed and needs to be revised is the answer. "C" brings out a discrepancy. Established that means accepted research studies by private sectors indicates that the figure is less than the figure indicated by the Government's study. Since multiple studies made by the private sector give a different figure, there has to be some defect in the Government's calculation method and it ought to be revised. Hence the answer is "C".

Please explain why option A incorrect!
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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10 Apr 2016, 22:21
smartguy595 wrote:
Any answer choice which says that the Government's calculation method is flawed and needs to be revised is the answer. "C" brings out a discrepancy. Established that means accepted research studies by private sectors indicates that the figure is less than the figure indicated by the Government's study. Since multiple studies made by the private sector give a different figure, there has to be some defect in the Government's calculation method and it ought to be revised. Hence the answer is "C".

Please explain why option A incorrect!

The govt. method includes one group and excludes another group, group which has some capital gains but still group is not included in method.
CR is about the latter group and calculation method is wrong because of the latter group.
We are no concerned with the group which is included. Yes that might be the right group , but how does it proves that method is wrong.
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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11 Apr 2016, 04:08

Type: Strengthen
Conclusion: The government’s calculation methods must be altered in order to provide statistics that measure true poverty.

Premise:
P1: The United States government uses only a household’s cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household’s disposable income.
P2:For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in “poverty” because this income is not included in the calculation.

A. For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household’s disposable income.
It does not take other factors, besides cash, into consideration

B. While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.
Not effect - not relevant

C. Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.
Keep - although it assumes that other research studies must be accurate.

D. Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.
Endorsement does not point out the why it needs revision.

E. The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.
It contradict the examples given i.e. it shows that the government did actually take other factors 'examples' into consideration.
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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11 Apr 2016, 06:07
smartyman wrote:

Type: Strengthen
Conclusion: The government’s calculation methods must be altered in order to provide statistics that measure true poverty.

Premise:
P1: The United States government uses only a household’s cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household’s disposable income.
P2:For example, retirees who live off of capital gains from an extensive portfolio could earn hundreds of thousands of dollars, yet be classified by the government as living in “poverty” because this income is not included in the calculation.

A. For more than 99% of those classified as living in poverty, yearly cash income comprises the vast majority of each household’s disposable income.
It does not take other factors, besides cash, into consideration

B. While the government’s calculation method indicated a 12.5% poverty rate in 2003, the same calculation method indicated anywhere from a 9% to a 16% poverty rate during the preceding decade.
Not effect - not relevant

C. Most established research studies conducted by the private sector indicate that the number of people truly living in poverty in the U.S. is less than that indicated by the government’s calculation method.
Keep - although it assumes that other research studies must be accurate.

D. Several prominent economists endorse an alternate calculation method which incorporates all income, not just cash income, and adjusts for taxes paid and other core expenses.
Endorsement does not point out the why it needs revision.

E. The government’s calculation method also erroneously counts those who do not earn income in a given year but who have substantial assets on which to live during that year.
It contradict the examples given i.e. it shows that the government did actually take other factors 'examples' into consideration.

Dear smartyman,

Could you please elaborate " yearly cash income comprises the vast majority of each household’s disposable income." in Option A
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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11 Apr 2016, 15:36
1
This is my interpretation:

P1: The United States government uses only a household’s cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household’s disposable income.

Cash ---> Government policy (premise)

Conclusion:Others ---> Cash ---> Government Policy change (Need from Question Stem)
Others ------> Government policy change (Strengthen)

1. Needs to shows that Other factors influence Cash, therefore government policy needs to change
2. Needs to shows that Other factors ---> Government policy change i.e. Government assumes cash (before tax) is the only determinant, others are not.

A. strengthens the fact that cash is sufficient for government to retain its policy (weaken policy needs changes)
Cash before tax = yearly cash income = Disposable income >>>>>> Other factors ---> Other factors negligible[/color]
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Re: CR Revision: The United States government uses only a household’s cash [#permalink]

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11 Apr 2016, 19:49
smartyman wrote:
This is my interpretation:

P1: The United States government uses only a household’s cash income before taxes to determine whether that household falls below the poverty line in a given year; capital gains, non-cash government benefits, and tax credits are not included. However, yearly cash income is not a fool-proof measure of a given household’s disposable income.

Cash ---> Government policy (premise)

Conclusion:Others ---> Cash ---> Government Policy change (Need from Question Stem)
Others ------> Government policy change (Strengthen)

1. Needs to shows that Other factors influence Cash, therefore government policy needs to change
2. Needs to shows that Other factors ---> Government policy change i.e. Government assumes cash (before tax) is the only determinant, others are not.

A. strengthens the fact that cash is sufficient for government to retain its policy (weaken policy needs changes)
Cash before tax = yearly cash income = Disposable income >>>>>> Other factors ---> Other factors negligible[/color]

smartyman Thank you..got it now!!
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The United States government uses only a household's cash [#permalink]

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23 Oct 2016, 01:56
honchos wrote:
I have read all the discussions, D still seems to be the better answer.

On what grounds can we confirm that irrigation gain is minimized to an extent that it will double the profit?

IMO, Opn D is partly a strengthener. In the absence of opn C, I would choose Opn D. But in such questions where opns are really close, try to stop for 5 seconds and ask 'which of the opns is valid?' Opn D just talks about the preference of some economists, but is the opn strong enough to put some concrete results and prove that the conclusion is true? No.
Opn C does that. The keyword here in opn C is Established.
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