In the country of Xania, periods of political instability are always

Question

In the country of Xania, periods of political instability are always accompanied by a volatile Xania stock market and by volatility of Xania's currency compared to currencies of other countries. At the present time, Xania's currency is experiencing volatility. Hence, the Xania stock market must also be experiencing volatility.

Which of the following allows the conclusion above to be properly drawn?

(A) Whenever Xania is politically stable, the Xania currency is stable as well.
(B) Whenever the Xania currency is stable, Xania is politically stable as well.
(C) Whenever the Xania stock market is unstable, Xania is politically unstable as well.
(D) Whenever the Xania stock market is unstable, the Xania currency is unstable as well.
(E) Whenever the Xania stock market is stable, the Xania currency is stable as well.

chetan2u · Accepted Answer

In the country of Xania, periods of political instability (X) are always accompanied by a volatile Xania stock market (A) and by volatility of Xania's currency compared to currencies of other countries (B). At the present time, Xania's currency is experiencing volatility. Hence, the Xania stock market must also be experiencing volatility.

The reasoning is. 
If X, then A and B. 
Conclusion: A is happening, so B must be happening.

What do we require to fill up the gap?
Any of the below. 
1.  Relation between A and B : If A, then B. 
2.  Relation between A and X : If A, then X. 
This will convert into: A leads to X and X leads to A and B.

Which of the following allows the conclusion above to be properly drawn?

(A) Whenever Xania is politically stable, the Xania currency is stable as well.
This tells us :  If not X, then not A.  
This can be written as:  If A, then X.  
Exactly what we were looking for. A leads to X and X will further lead to B.

(B) Whenever the Xania currency is stable, Xania is politically stable as well.
This tells us :  If not A, then not X.  
This can be written as:  If X, then A.  
We already know this. Does not fill up the gap.

(C) Whenever the Xania stock market is unstable, Xania is politically unstable as well.
This tells us :  If B, then X.  
But we know nothing about X.

(D) Whenever the Xania stock market is unstable, the Xania currency is unstable as well.
This tells us :  If B, then A.  
This can be written as:  If not A, then not B.  
But we are looking for If A, then B.

(E) Whenever the Xania stock market is stable, the Xania currency is stable as well.
This tells us :  If not B, then not A.  
This can be written as:  If A, then B.  
Again fills up the gap.

Answer could be A or E.

LamboWalker · Answer

Official Explanation:

The correct answer is A.  The argument boils down to the following:
 Premise 1:  If there is political instability, then the stock market is volatile (unstable).
 Premise 2:  If there is political instability, then the currency is volatile.
 Premise 3:  The currency is volatile.
 Conclusion:  The stock market is volatile.

To reveal the argument's structure, let's reduce it to symbols:
 Premise 1:  If A, then B.
 Premise 2:  If A, then C.
 Premise 3:  C.
 Conclusion:  B.

The conclusion above requires the following additional premise: 
 Premise 4:  If the currency is volatile, then there is political instability.
 Premise 4:  If C, then A.

Only answer choice (A) provides this essential premise. Note that premise number 4 above is essentially the same proposition as answer choice (A). In other words, the following two prepositions are logically identical:
 Premise 4:  If C, then A.
 Answer choice (A):  If not A, then not C.

Choice (B) merely reiterates premise number 2. In other words, the following two statements are essentially the same:
If X, then Y.
If not Y, then not X.

Choice (C) commits the following fallacy:
 Premise:  If X, then Y.
 Conclusion:  If Y, then X.

Choice (D) would lead to the conclusion that if the stock market is volatile, then the currency is volatile. In other words, (D) commits the same fallacy as (C):
 Premise:  If X, then Y.
 Conclusion:  If Y, then X.

Choice (E) merely reiterates the argument's conclusion. In other words, the following two statements are essentially the same:
If X, then Y.
If not Y, then not X.

(Source: Petersons)

rishabbhan · Answer

X= polictical instability; A= currency volatility; B= stock market volatility

According to the question:
If X, then A & B
Also given: If A, then B

According to my understanding, the general pre thinking will be:
If Not (A&B), then Not X
If Not B, then Not A

Going by the above logic (my understanding), option B or option E can be the answer, but the OA given is option A

Can someone please rectify where am I going wrong?

harshilNori · Answer

What a good question!

if (a) then (b) doesnt mean if not (a) then not (b).

Premise is : If Xania is politically unstable (a) then currency and stock market (b) are unstable. 
Need to prove: If Xania is politically stable (a) then currency is stable (b). (since this means only if Xania is politically unstable will currency be unstable).

Only A makes this possible.
(A) Whenever Xania is politically stable, the Xania currency is stable as well.

arushi118 · Answer

KarishmaB  Can you please help me with where I am going wrong:
This was my thinking:

Political instability is sufficient for instable stock and instable currency
We want instable currency (A) to be sufficient for instable stock(B). So it is If A then B -> which should mean if not B then not A -> which is given by option E. But not able to understand that why is option E incorrect.

I can understand that if we say that instable currency is sufficient for political instability, then that will ultimately lead to instable currency being sufficient for instable stock, but not sure that why is E not correct.

KarishmaB · Answer

Premises:  
If political instability, then volatile market and volatile currency. 
Currently, currency is volatile.

Conclusion:  
Currently, market is volatile.

Currency volatility does not imply market volatility or political instability . it is possible that currency can be volatile because of other reasons also. 
What do we need to infer that the market is volatile? Something that tells us that currency volatility happens only when there is political instability or that currency and market are always volatile together only.

(A) Whenever Xania is politically stable, the Xania currency is stable as well.

This option: If political stability, then currency stable too. (If X then Y)
So 'Not Y implies Not X'
If currency is volatile, it implies political instability. 
This means that there is political instability right now and hence market volatility too. 
Given this option, our conclusion is established. Correct.

(B) Whenever the Xania currency is stable, Xania is politically stable as well.

This option: If currency stable, then politically stable too. (If X then Y)
'Not X' does not tell us anything about Y. So we cannot conclude political instability.

(C) Whenever the Xania stock market is unstable, Xania is politically unstable as well.

We need a relation with currency.

(D) Whenever the Xania stock market is unstable, the Xania currency is unstable as well.

This option: If market unstable, currency unstable (If X, then Y)
Y does not imply anything about X. Ignore.

(E) Whenever the Xania stock market is stable, the Xania currency is stable as well.

This option: If market stable, currency stable (If X, then Y)
'Not Y' does imply 'Not X'. Since currency is unstable it implies that market is unstable too. Correct.

Both (A) and (E) are correct.

In the country of Xania, periods of political instability are always

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

In the country of Xania, periods of political instability are always

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards