The widespread staff reductions in a certain region’s economy are said

I think this may help.

Conclusion: people who are employed have not decreased their spending because their savings isn't increasing- actual spending is undiminished. Author must think that there are no other extra expenses that the people who are employed must spend despite their efforts of decreasing spending.

(B) People in the region who continue to be employed and who have relatives who have lost their jobs commonly assist those relatives financially.

If people who are employed assist their relatives, then conclusion falls apart. Author's conclusion is that their actual spending is undiminished, but this choice says that there is a different reason that people are spending on. So actual spending could be undiminished and the remaining amount, they are spending on their families.

How do you know debt repayment as mentioned in the option A is their actual spending??

The question is about assumption. Option A talks about debt. The main argument does not even contain any such information. Option A qualifies for a strengthening answer, but not assumption.

Hi Parikshit

Let me try to answer your query. Analyzing the stimulus, we find:

Conclusion: Actual spending by such people (people who still have their jobs) is undiminished.

Premise on which it is based (why): There has been no unusual increase in the amount of money held by those people in savings accounts.

Clearly this is assuming the following: Income = New purchases + Money in savings accounts. Since the income (as they continue to have jobs) and money in savings account has remained constant, the conclusion is drawn that new purchases have also not reduced. The underlying assumption here is that there is no third avenue for people to spend their income.

With this, let us analyze the options:

(A) If people in the region who continue to be employed have debts, they are not now paying them off at an accelerated rate. Correct. This states that a third avenue is not being used to spend their income.

(B) People in the region who continue to be employed and who have relatives who have lost their jobs commonly assist those relatives financially. This states that there is a third, new, expense head for those who continue to have jobs. This, therefore, weakens the conclusion and cannot be an assumption on which it is based. Eliminate.

(C) If people in the region who have lost jobs get new jobs, the new jobs generally pay less well than the ones they lost. Irrelevant. Does not address expenses of those who continue to have jobs. Eliminate.

(D) People in the region who continue to be employed are pessimistic about their prospects for increasing their incomes. Irrelevant. Does not address expenses of those who continue to have jobs. Eliminate.

(E) There exist no statistics about sales of goods in the region as a whole. If this were true, it would be impossible to draw conclusions about spending patterns of the population, and hence acts as a weakener. This, therefore, weakens the conclusion and cannot be an assumption on which it is based. Eliminate.

Hope this helps.

Ans: A

If people in the region who continue to be employed have debts, they are not now paying them off at an accelerated rate.

a)If we negate this statement, then the argument falls apart. Author thinks that saving unchanged--> no change in spending

But one can spend less in cloths,grocery and spend more money on paying their debts.

negated statement: If people in the region who continue to be employed have debts, they are now paying them off at an accelerated rate

this implies that, they are spending less and pays off their debts. So, as the conclusion says spending unchanged...is not true anymore.

Can anyone please explain why not Option B

Posted from my mobile device

Hi Bunuel,

Can you help me understand option A, and how it is correct?

Thanks,
Parikshit

Author's Conclusion: Spending is undiminished even though job loss is on the cards.
He is guaging this from balance in the savings account that it's not increased.

Assumption: Something that says there is no possibility other than regular spending that may have resulted in no increase in the balance of the savings'.
Option A: .......not paying the debts......
Author is assuming, that he's paying no debt ( this is used as an example of something other than actual spending) but only regular spends are happening.
It's a bit tricky.....

Posted from my mobile device

Basically the assumption is that there is no third pot where the money is going - it's either the savings account or the purchase of goods. Option (A) points out that assumption indirectly.

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.