Curbing government spending has been demonstrated to raise t

Question

Curbing government spending has been demonstrated to raise the value of a country's currency over time. However, many economists no longer recommend this policy. A currency of lesser value causes a country's exports to be more competitive in the international market, encouraging domestic industries and making the economy more attractive to foreign investment.

The statements above most strongly support which of the following inferences?

(A) Limited government spending can also lead to a reduction in the national deficit.
(B) Curbing government spending can make a country's exports less competitive.
(C) Many economists now recommend higher levels of government spending.
(D) An increase in the value of a currency will result in reduced government spending.
(E) Competitive exports indicate a-weak currency.

vad3tha · Accepted Answer

Here is the official answer

Answer choice (A) may be generally plausible, but the given premises do not mention the national deficit. This answer choice does not have to be true as a result of the information given in the argument. Refrain from bringing in any external facts/premises.

Answer choice (C) might also be generally plausible, but (C), too, requires an additional step from the premises. The fact that economists no longer recommend reduced government spending does not necessarily mean that many economists now recommend increased spending. It is possible that they recommend neutral spending levels.

Both answer choices (D) and (E) employ faulty logic. It may be true that reduced government spending will increase a currency's value, but we do not know whether the reverse is true. Increasing a currency's value does not necessarily have to result in reduced government spending. Similarly, though a weak currency will make exports more competitive, competitive exports do not necessarily indicate a weak currency; exports may be competitive on some other grounds (e.g, exceptional quality).

Answer choice (B) is correct, since it follows directly from the premises. According to the argument, curbing government spending can raise a currency's value. A weaker currency makes a country's exports more competitive. A stronger currency, then, would make a country's exports less competitive than they would have been with a weaker currency. Thus, curbing government spending CAN make a country's exports less competitive. Notice that the word can makes this answer choice a very limited claim. This choice does not state that curbing government spending will make a country's exports less competitive. Such an outcome is simply a possibility. Answer choice (B) is the correct answer.

JarvisR · Answer

Thank you vad3tha for all the effort.

Curbing government spending has been demonstrated to raise the value of a country's currency over time. However, many economists no longer recommend this policy. A currency of lesser value causes a country's exports to be more competitive in the international market, encouraging domestic industries and making the economy more attractive to foreign investment. 1.Curbing Govt Spending -> raise currency value. 2.economists no longer recommend 1. 2. lesser currency value -> country's export competitive -> the economy more attractive to foreign investment. The statements above most strongly support which of the following inferences? (A) Limited government spending can also lead to a reduction in the national deficit. >> Nothing mentioned reg national deficit. (B) Curbing government spending can make a country's exports less competitive. Correct. (C) Many economists now recommend higher levels of government spending. >> They don't recommend 1 but not mentioned if they recommend HGS. (D) An increase in the value of a currency will result in reduced government spending. >> Reverse of wht is mentioned.Cant be proved from arg. (E) Competitive exports indicate a-weak currency. >> Not always ;reverse of wht is mentioned in arg.

nikhiljd · Answer

If option E said..
Competitive exports  could  indicate a-weak currency. 
would this also be correct?

AryamaDuttaSaikia · Answer

A currency of lesser value necessarily does not imply the currency is weak. "lesser value" is not synonymous to "Weak". Hence "E" is not apt.

neelambhavnani · Answer

(A) Limited government spending can also lead to a reduction in the national deficit -- t his has not been talked about at all 
(B) Curbing government spending can make a country's exports less competitive --  this is an inference that can be drawn from the information provided in the argument, also it is not extreme answer choice hence the correct one 
(C) Many economists now recommend higher levels of government spending-  economists do not recommend "Curbing Government Spendings" does not mean that they recommend Higher Levels of Government spendings either.. maybe they recommend no changes in the current level of government spendings 
(D) An increase in the value of a currency(X) will result in reduced government spending(Y)--  argument states that Y causes X, moreover an inference is something that is not stated explicitly  
(E) Competitive exports indicate a-weak currency --  again the argument says "Weak currency makes a country's export to be more competitive" it cannot be assumed that country with "High value of currency" will not have competitive exports at all

iamArjuna · Answer

The Manhattan study material writes about the inference questions that it requires us to find an answer that must be true according to the information in the argument.

But then again we favour option B, which has a 'can' in the answer and not option E, which doesn't use 'can'

I understand that we do not have to go extreme. But then what is the point of defining inference question meaning that way

Please help here.

Posted from my mobile device

Target4bschool · Answer

GMATNinja   nightblade354

In option B
(B) Curbing government spending can make a country's exports less competitive.

From the passage: 
Low spending ->high currency value ................(1)
Low currency value -> high competition value....(2)

In the answer choice: 
Low spending   ------>  low competition value

We know that 
Low spending-> high currency value.......from (1)

But high currency value --neccessarily?? --> less competition value

If low currency value -> high competition value, can we say that 
high currency value ->less competition value

HOW can we make sure that this is bulletproof. Like there may be assumptions

nightblade354 · Answer

You're 100% correct. We have no idea about the inverse relationship. Just because low spending = high currency, doesn't mean that high spending = low currency.

NEYR0N · Answer

So what's the answer here? We know E has an extreme word, but B also has a shaky assumption: if y leads to x and x leads to t , we cant assume that that !y leads to !t.

I am assuming the word "CAN" is the key ?

nightblade354 · Answer

INprimesItrust ,

Stick to official questions and lsat questions. We have too many high quality questions (official questions) to waste your time on bad quality questions. These types will only lead you to bad habits on test day.

Curbing government spending has been demonstrated to raise t

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Curbing government spending has been demonstrated to raise t

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