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Updated on: 18 Aug 2025, 02:03
Originally posted by GMATslaughter100 on 17 Aug 2025, 10:26.
Last edited by GMATslaughter100 on 18 Aug 2025, 02:03, edited 1 time in total.
Last edited by GMATslaughter100 on 18 Aug 2025, 02:03, edited 1 time in total.
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D
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
55%
(hard)
Question Stats:
50% (00:54) correct
50%
(00:56)
wrong
based on 72
sessions
History
Date
Time
Result
Not Attempted Yet
How does inflation occur?
(1) Lowering interest rates can stimulate economic growth and encourage borrowing and investment. However, since people have more money, there will likely be an increase in consumer spending, which leads to inflation.
(2) When interest rates are lower, people are able to spend and invest more freely as borrowing is cheaper. This increases the demand for goods and services, which generally leads to an increase in prices.
(1) Lowering interest rates can stimulate economic growth and encourage borrowing and investment. However, since people have more money, there will likely be an increase in consumer spending, which leads to inflation.
(2) When interest rates are lower, people are able to spend and invest more freely as borrowing is cheaper. This increases the demand for goods and services, which generally leads to an increase in prices.
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17 Aug 2025, 10:31
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KarishmaB RonPurewal MartyMurray GMATNinja WhitEngagePrep
Hi experts, I am not good at this kind of verbal DS, would you help shed some light on it?
I do not know what GMAT tries to test here. I feel like, inflation is a complex topic, it can be caused by so many reasons. (1)(2) may provide some, but it does not have the completeness. So I think they cannot sufficiently answer the question, we should choose E. However, some may say D should be the answer since they both explain a bit about the mechanism of inflation. So how should we approach this sort of question? Thanks in advance!
Hi experts, I am not good at this kind of verbal DS, would you help shed some light on it?
I do not know what GMAT tries to test here. I feel like, inflation is a complex topic, it can be caused by so many reasons. (1)(2) may provide some, but it does not have the completeness. So I think they cannot sufficiently answer the question, we should choose E. However, some may say D should be the answer since they both explain a bit about the mechanism of inflation. So how should we approach this sort of question? Thanks in advance!
18 Aug 2025, 00:35
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If we bring in other factors from our knowledge, we should say you this is E, but in that case DS should be a Stanley Fisher's book, so definitely D, they explain why it happens and from what it stems from and despite not taking all the factors that in real life bring in inflation, l this is pretty enough.
GMATslaughter100
