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ezinis
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To improve the long-term savings rate of the citizens of Levaska, the Updated on: 24 May 2019, 00:24
Originally posted by ezinis on 08 Oct 2010, 15:59.
Last edited by Bunuel on 24 May 2019, 00:24, edited 1 time in total.
Renamed the topic and edited the question.
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C
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Difficulty:

25% (medium)

Question Stats:

79% (02:00) correct 21% (02:16) wrong based on 1472 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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C
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ezhilkumarank
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To improve the long-term savings rate of the citizens of Levaska, the 08 Oct 2010, 16:27
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ezinis
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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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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To improve the long-term savings rate of the citizens of Levaska, the 31 Jul 2011, 04:19
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can somebody explain me why option D is out of scope?
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To improve the long-term savings rate of the citizens of Levaska, the 27 Aug 2011, 04:46
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UtterNonsense
can somebody explain me why option D is out of scope?
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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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To improve the long-term savings rate of the citizens of Levaska, the 16 Jan 2012, 07:16
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+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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To improve the long-term savings rate of the citizens of Levaska, the 29 Aug 2012, 08:46
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I just responded to a student's doubt to this question and thought of posting the video here :)

[youtube]https://www.youtube.com/watch?v=X2XkSIRKcZQ[/youtube]
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To improve the long-term savings rate of the citizens of Levaska, the 29 Jun 2025, 07:14
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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).

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