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# To improve the long-term savings rate of the citizens of

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Manager
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To improve the long-term savings rate of the citizens of  [#permalink]

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08 Oct 2010, 14:59
2
3
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Difficulty:

15% (low)

Question Stats:

80% (01:47) correct 20% (02:00) wrong based on 631 sessions

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To improve the long-term savings rate of the citizens of Levaska, the country's legislature decided to implement a plan that allows investors to save up to \$1,000 per year in special accounts without paying taxes on the interest earned unless withdrawals are made before the investor reaches age sixty-five. Withdrawals from these accounts prior to age sixty-five would result in the investor's having to pay taxes on all the accumulated interest at the time of withdrawal.

Which of the following, if true, most strongly supports the prediction that the legislature's plan will have its intended effect?

A. The money saved in the tax-free savings accounts will be deposited primarily in those banks and financial institutions that supported the legislation instituting the plan.
B. The majority of people choosing to take advantage of the tax-free savings accounts will withdraw their money prior to age sixty-five.
C. A significant number of the citizens of Levaska will invest in the tax-free savings accounts well before they reach the age of sixty-five.
D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.
E. People who are not citizens of Levaska are not eligible to invest in the tax-free savings accounts, even if their income is taxable in Levaska.
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08 Oct 2010, 15:27
1
ezinis wrote:
To improve the long-term savings rate of the citizens of Levaska, the country's legislature decided to implement a plan that allows investors to save up to \$1,000 per year in special accounts without paying taxes on the interest earned unless withdrawals are made before the investor reaches age sixty-five. Withdrawals from these accounts prior to age sixty-five would result in the investor's having to pay taxes on all the accumulated interest at the time of withdrawal.

Which of the following, if true, most strongly supports the prediction that the legislature's plan will have its intended effect?

A. The money saved in the tax-free savings accounts will be deposited primarily in those banks and financial institutions that supported the legislation instituting the plan.
B. The majority of people choosing to take advantage of the tax-free savings accounts will withdraw their money prior to age sixty-five.
C. A significant number of the citizens of Levaska will invest in the tax-free savings accounts well before they reach the age of sixty-five.
D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.
E. People who are not citizens of Levaska are not eligible to invest in the tax-free savings accounts, even if their income is taxable in Levaska.

Straight forward. Option C is correct.

Reasons: POE method.

A - New information provided. Out of scope.
B - This would weaken the prediction.
D - Out of scope.
E - Out of scope or not relevant.
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08 Oct 2010, 20:28
A pretty Obvious ans:
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09 Oct 2010, 02:27
It was obvious but i wasted my 2 min.
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31 Jul 2011, 03:19
can somebody explain me why option D is out of scope?
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27 Aug 2011, 03:46
1
UtterNonsense wrote:
can somebody explain me why option D is out of scope?

D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.

Hello,

Option D is kind of forcing us to make an additional assumption that since people used to deposit lesser money in previous years, they will suddenly start depositing more after the new policy by the govt. But be careful we don't have enough info to make this assumption.

I would not call it out of scope. Just a good trap answer.
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27 Aug 2011, 10:18
Little confused here..

But with C, how can we guarantee that people will not withdraw any money from the bank and in turn making the plan effective..That is not stated in the answer..The plan would become effective if people invest before 65 and not withdraw until 65..

That was my method of eliminating C..
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28 Aug 2011, 09:03
nothing else fits here except C....so for me its C
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02 Sep 2011, 13:19
By the process of elimination got C!
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02 Sep 2011, 17:41
C seems to be the best among all/
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16 Sep 2011, 01:14
C is the only possible answer....is this 700 question I have my own doubts
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16 Sep 2011, 14:47
I picked C...I felt tempted by D.
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20 Sep 2011, 18:29
bblast wrote:
UtterNonsense wrote:
can somebody explain me why option D is out of scope?

D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.

Hello,

Option D is kind of forcing us to make an additional assumption that since people used to deposit lesser money in previous years, they will suddenly start depositing more after the new policy by the govt. But be careful we don't have enough info to make this assumption.

I would not call it out of scope. Just a good trap answer.

what make this question hard?
the trap answer D is explained wonderfully by you.

what I wish to know is WEATHER TRAP ANSWER INDUCE US TO MAKE AN ASSUMPTION AND TO BE WRONG.

if we know this kind of thinking of gmat, we can realize the trap in the test condition more easily.
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09 Oct 2011, 01:14
was initially confused b/w C and D...
but after careful examination, i chose C...
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03 Nov 2011, 19:00
That's right...I mostly got C by process of elimination as well.
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05 Nov 2011, 20:27
OptimusPrimea1 wrote:
Little confused here..

But with C, how can we guarantee that people will not withdraw any money from the bank and in turn making the plan effective..That is not stated in the answer..The plan would become effective if people invest before 65 and not withdraw until 65..

That was my method of eliminating C..

I like this question.

a strenthener or weakener do not prove or destroy the argument. They only increase the belief or doubt in the conclusion by increasing the belief or doubt in one of many assumptions of the argument-one argument of course has many assumptions. This is clasical thinking of in kaplan premier book, a very basic book.

a assumption can be an strengthener, of course but a strengthener can not be an asumption .

in above question, C displays an assumption that many persons will deposit and is of course a strengthener.

another assumption that persons will not withdraw deposit will ,of course, be a strengthener. but we do not need 2 assumption to be correct to have a strengthener. The information which increases belief in ONE assumption, not in 2 or all assumptions, or which is ONE assumption ,not 2 or all assumptions, is enough to be a strengthener

are you satisfied with this explanation. pls, let me know
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Re: To improve the long-term savings rate of the citizens of  [#permalink]

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13 Dec 2011, 13:30
ezinis wrote:
To improve the long-term savings rate of the citizens of Levaska, the country's legislature decided to implement a plan that allows investors to save up to \$1,000 per year in special accounts without paying taxes on the interest earned unless withdrawals are made before the investor reaches age sixty-five. Withdrawals from these accounts prior to age sixty-five would result in the investor's having to pay taxes on all the accumulated interest at the time of withdrawal.

Which of the following, if true, most strongly supports the prediction that the legislature's plan will have its intended effect?

A. The money saved in the tax-free savings accounts will be deposited primarily in those banks and financial institutions that supported the legislation instituting the plan.
B. The majority of people choosing to take advantage of the tax-free savings accounts will withdraw their money prior to age sixty-five.
C. A significant number of the citizens of Levaska will invest in the tax-free savings accounts well before they reach the age of sixty-five.
D. During the ten years prior to implementation of the plan, Levaskans deposited an increasingly smaller percentage of their annual income in long-term savings accounts.
E. People who are not citizens of Levaska are not eligible to invest in the tax-free savings accounts, even if their income is taxable in Levaska.

Since most people are getting C as the answer, there isn't much point in analyzing the whys and wherefores. Lets talk about how to get the answer quickly.

Before getting to the choices, lets point out that the conclusion is "long term savings rate will improve of the citizens of Levaska" <<-- personally for me, identifying this before reading the answer choices helped reduce the time needed to come to the right answer. Give it a try, might work for you.

E - out, not citizens of Levaska
A - out, as it does nothing to strengthen/weaken the conclusion
B - hurts. if people withdraw then savings rate will not increase.
D - the conclusion talks about future savings rates and not what had happened before it.

C - helps the "long term" component of our conclusion.
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Re: To improve the long-term savings rate of the citizens of  [#permalink]

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31 Dec 2011, 21:13
C it is ,tax free savings is very lucrative policy and D says what happen 10 years prior but no reference to what will happen after.
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Re: To improve the long-term savings rate of the citizens of  [#permalink]

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02 Jan 2012, 22:00
A. Where the money is deposited is irrelevant to the conclusion that long-term savings are to be increased.
B. Clearly weakens. If most people withdraw, then the amount (a huge amount at the time of withdrawal) will be taxed and the long-term savings will not increase.
C. If more people invest, then it supports the contention that the long-term savings of the citizens might increase. CORRECT ANSWER.
D. Requires an extra assumption that what happened earlier WILL NECESSARILY happen in the future. That is why this choice is a trap.
E. Out of scope. The argument talks only about the citizens of Levaska.
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Re: To improve the long-term savings rate of the citizens of  [#permalink]

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16 Jan 2012, 06:16
+1 for C.

I eliminate D with the following points:

objective of the plan is to increase rate of long term savings, i.e., to increase no. of people who invest in long term savings.

D says that only small percentage of savings is happening..but it does not talk about no. of people. Even if we consider this not the ground to eliminate, we can not accept D because we don't know what reasons are prohibiting people from saving large percentage. Probably they had better alternatives compared with the new plan. If that is the case, people will still continue having small percentage of savings.

In contrast with that, C gives us a FACT (notice usage of the words: "WILL INVEST") not an assumption.
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Re: To improve the long-term savings rate of the citizens of &nbs [#permalink] 16 Jan 2012, 06:16

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