V07-19

Question

Ten and five years ago, Bangladesh experienced brief export booms when its currency, the taka, unexpectedly weakened. During each episode factories were able to increase production within weeks, and exports rose sharply. Some politicians now argue that deliberately allowing the taka to weaken again will produce a similar surge in manufacturing through higher exports.
 
Which of the following, if true, would give the government the strongest reason to doubt that acting on the politicians’ proposal will achieve its aim?

A. Several of the politicians now urging a weaker taka made the same recommendation before the two earlier episodes of currency weakness.
B. After decades of operating well below peak capacity, Bangladesh’s manufacturing sector is now operating near its peak.
C. An economy gains from higher exports only when its currency is strong or the export increase is exceptionally large.
D. All countries whose manufactured products compete with Bangladesh on the world market currently have stable currencies.
E. Upgrading plant efficiency could make Bangladesh’s products more competitive abroad without any change in the taka’s value.

Bunuel · Answer

Official Solution:

Ten and five years ago, Bangladesh experienced brief export booms when its currency, the taka, unexpectedly weakened. During each episode factories were able to increase production within weeks, and exports rose sharply. Some politicians now argue that deliberately allowing the taka to weaken again will produce a similar surge in manufacturing through higher exports.
 
Which of the following, if true, would give the government the strongest reason to doubt that acting on the politicians’ proposal will achieve its aim?

A. Several of the politicians now urging a weaker taka made the same recommendation before the two earlier episodes of currency weakness.
B. After decades of operating well below peak capacity, Bangladesh’s manufacturing sector is now operating near its peak.
C. An economy gains from higher exports only when its currency is strong or the export increase is exceptionally large.
D. All countries whose manufactured products compete with Bangladesh on the world market currently have stable currencies.
E. Upgrading plant efficiency could make Bangladesh’s products more competitive abroad without any change in the taka’s value.

(A) Is irrelevant (politicians' stances / opinions don't have a direct bearing on any of the economic indicators in the argument). 
 
 (B) CORRECT.  Since the manufacturing sector is already at peak, even if a demand for Bangladeshi products develops outside Bangladesh because of weak currency (or any other reason), the country would not be able to meet that export demand - it has no capacity to produce more and there would not be an increase in manufacturing, at least not without long-term investments into new factories. Therefore it would not be possible to achieve another similarly substantial increase in exports. 
 
(C) We cannot evaluate the effects of (c) until we know whether the purported rise in exports will be 'significant' (circular reasoning - we can't base advocacy for/against a policy on its uncertain results) 
 
(D) Is irrelevant, as there's no material difference between this situation and the situation during the first two export booms: notice that, in those cases, the reference currencies were all stable as well 
 
(E) This option is irrelevant: the question asks us to undermine the politician's suggestion, not to suggest an alternative. The conclusion is that weakening taka will boost exports. There are two parts:  weakening taka  and  boosting exports . The weakening statement must point out why weakening taka will NOT boost exports. Option E does not address the  weakening taka  part.

Answer: B

manasiT22 · Answer

Very good question.   E is the trap. It is giving an alternative to politician's recommendation and NOT undermining it     B is the only possible answer as it is directly undermining the politician's recommendation

Lets re-read the question stem once again:
Which of the following,   if true, provides the government with the strongest grounds to doubt that the politicians’ recommendation, if followed, will achieve its aim ?

I guess the author has purposely made it so complicated.

Let's rephrase the question stem and make it a little less complicate. The question stem is asking:
  Which option will undermine the politician's recommendation the most?

Option A    = Several of the politicians now recommending that the taka be allowed to become weak made that same recommendation before each of the last two periods of currency weakness. =  Irrelevant

Option B    =  After several decades  of operating  well below peak capacity , Bangladesh’s manufacturing sector is  now operating at near-peak levels. 
If we see the colored part, it shows that previously increase in exports was possible as there was capacity to manufacture more. But currently it is already operating at near-peak capacity leaving little scope for the exports to increase.
Let's re-read the Politicians recommendation:
 Now some politicians are saying that, in order to cause another similarly sized increase in exports,  the government should allow the taka to become weak again.
Well you clearly see the recommendation is to   cause another similar sized increase  .
Clearly we do not have the capacity to do so because in past we were running under-capacity and currently we are running near-peak capacity.
So the Delta i.e. difference will never be the same and currently it will be minuscule versus the past delta.
Thus it clearly undermines the politician's suggestion and will never achieve its objective.

Option C    = The economy of a country experiencing a rise in exports will become healthier only if the country’s currency is strong or the rise in exports is significant.
Are we discussing economics here? LOL. If you think otherwise, show me the word 'economy' in the question set.  Irrelevant - Probably to woo Economists and wanna be economists into a sweet trap

Option D    = Those countries whose manufactured products compete with Bangladesh’s on the world market all currently have stable currencies.
 Irrelevant

Option E    = A sharp improvement in the efficiency of Bangladesh’s manufacturing plants would make Bangladesh’s products a bargain on world markets even without any weakening of the taka relative to other currencies.
 Extremely strong contender to B but  it can be the OA IF the question stem would have asked for   AN ALTERNATIVE  to the politicians recommendation. 
Since the question stem talks about weaking the recommendation and not an alternative to the recommendation, we eliminate this option with no regret.

Bunuel · Answer

The question or/and solution has been revised and edited. Thank you  sayantanc2k  !!!

sssdd1234 · Answer

I think this is a  high-quality  question and I agree with explanation.

bb · Answer

Very minor changes to grammar of answer choices have been made to rephrase them for better readability.

secretsach · Answer

How are we relating Production to Exports. Production can be at maximum but Exports can still be at bottom.

bb · Answer

That is an excellent point. You are the only one in 10 years who brought this up.

If the goal is to increase exports, they can come at the cost of domestic sales and still increase and since we don’t know the split of production distribution between domestic and international markets, it is indeed possible to reroute products. There is an easy fix to this to tweak the passenger bit but this is an excellent point!

Awesome job using logic and thinking about it! You have earned yourself two weeks of GMAT Club tests.

Thank you for bringing this up!

Posted from my mobile device

Sushi_545 · Answer

Hi I approached it this way got it wrong -

cause: weak taka
effect: boost export

what if there are some other cause other then weak taka option E states that improvement in bangladesh's manufacturing plants leads to more competitive prices internationally which implies more exports so this another cause is the the cause of the effect

can you let me know what is wrong with this approach

bb · Answer

Hi. I don’t think E) is the best or the strongest reason why politicians recommendation should be questioned.

Think about it this way, let’s assume Bangladesh discovered some kind of optimization that no one else else in the world discovered, plus you make the currency weak, anatomy sounds like a pretty good plan so this statement actually strengthens the politicians conclusion/recommendation.

snig264 · Answer

Hi  Bunuel , I have a concern, there is a line in the para "a weak taka not only made Bangladesh???s manufactured products a bargain on world markets but also spurred an increase in manufacturing output" and it clearly says that manufacturing outputs increasing. When we are selecting option B, arent we assuming the fact that the manufacturing output as it increased last time when demand increased, will not increase this time and that the peak is not redefined as the manufacturing increases? Also, I have seen in assumption questions that we cannot assume that if something is already at its peak, it cant increase more. So is this not the case? Awaiting your kind response.

egmat · Answer

snig264  Here are my two cents, if this helps:

Let me clarify the mechanism that made the weak taka strategy work  in the past :

Past scenario: 
Weak taka → Products cheaper internationally → Export demand surges → Companies  ramp up production  → Manufacturing output increases

The critical phrase is  "ramped up production to meet the surge in export demand."  This means companies had  SPARE CAPACITY  - they were producing below their maximum and could easily increase production.

Present scenario (Option B): 
Manufacturing sector NOW operating near peak capacity → Weak taka → Products cheaper → Export demand surges → BUT companies  CANNOT ramp up production  (already at maximum) → Manufacturing output cannot increase significantly

Addressing Your Concern:

You asked: "Aren't we assuming the peak can't be redefined as manufacturing increases?"

Here's the crucial distinction:
 
  Manufacturing output  = How much you're currently producing 
  Manufacturing capacity  = The maximum you CAN produce with current infrastructure, machinery, workforce

Option B tells us they're already operating near their  maximum capacity . To increase capacity itself requires:
 
 New factories (takes years) 
 New machinery (takes months/years)  
 Trained workers (takes time)

The politicians want a  SHORT-TERM  increase in manufacturing. That's impossible if you're already at peak capacity. The demand will be there, but the ability to fulfill it won't be.

Why Your Assumption Question Rule Doesn't Apply Here

You correctly noted that in assumption questions, we can't assume peaks can't be exceeded. However, this is a  WEAKEN  question, not an assumption question:

Assumption questions:  We shouldn't bring in outside assumptions - we work only with what's stated 
  Weaken questions:  Answer choices provide  NEW INFORMATION  that attacks the argument

Option B provides  new information  (that they're at peak capacity  now , unlike before) that breaks the causal mechanism the argument relies on.

Strategic Takeaway

For Weaken questions, always ask:  "What conditions allowed the plan to work before? Are those conditions still present?"

In this case:
 
  Then:  Spare capacity existed → could ramp up production → strategy worked 
  Now:  No spare capacity → cannot ramp up production → strategy won't work

This "capacity as constraint" concept appears frequently in GMAT business-related CR questions.

I hope this addresses your doubts!

If you want, you can practice similar questions  here  by selecting the type "Weaken"

bb · Answer

Wow. I just read this question prompt and I feel I need PhD just to read it

- I thin I am going to simplify it a bit.

V07-19

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