The widespread staff reductions in a certain region’s economy are said

Question

Competition Mode Question

The widespread staff reductions in a certain region’s economy are said to be causing people who still have their jobs to cut back on new purchases as though they, too, had become economically distressed. Clearly, however, actual spending by such people is undiminished, because there has been no unusual increase in the amount of money held by those people in savings accounts.

Which one of the following is an assumption on which the argument relies?

(A) If people in the region who continue to be employed have debts, they are not now paying them off at an accelerated rate.

(B) People in the region who continue to be employed and who have relatives who have lost their jobs commonly assist those relatives financially.

(C) If people in the region who have lost jobs get new jobs, the new jobs generally pay less well than the ones they lost.

(D) People in the region who continue to be employed are pessimistic about their prospects for increasing their incomes.

(E) There exist no statistics about sales of goods in the region as a whole.

Krishh9119 · Accepted Answer

Conclusion: Actual spending by such people is undiminished.

Premise 1: There has been no unusual increase in the amount of money held by those people in savings accounts.

Fact: The widespread staff reductions in a certain region’s economy are said to be causing people who still have their jobs to cut back on new purchases as though they, too, had become economically distressed.

Analysis:  We need to find the gap that will help us reach the conclusion from Premise.
 no unusual increase in money in savings accounts -->>actual spending by such people is undiminished ( No decrease in people's spending behavior).

Which one of the following is an assumption on which the argument relies? Question Type: Assumption

(A) If people in the region who continue to be employed have debts, they are not now paying them off at an accelerated rate.

Clearly, If this sentence is false, then our argument falls apart.

We can test this by Negation technique.
If people in the region who continue to be employed have debts, they are not now paying them off at an accelerated rate.

Negate:If people in the region who continue to be employed have debts, they are now paying them off at an accelerated rate.
This option clearly tells us that the reason the balance in account of people is not diminished even though they spend less is because of the debt payments .

Option B,C,D,E are out of context or unrelated.

exc4libur · Answer

argument
= staff reductions are said to cause those employed to cut spending
= but, clearly those employed did not cut spending
= because, their savings didnt increase

assumption

Ans (A) if employed are not paying their debts, then they must be spending - because if they were then the argument falls.

anshulvnd5 · Answer

Can anyone please explain why not Option B

Posted from my mobile device

sushmitha2 · Answer

I think this may help.

Conclusion: people who are employed have not decreased their spending because their savings isn't increasing- actual spending is undiminished. Author must think that there are  no  other extra expenses that the people who are employed must spend despite their efforts of decreasing spending.

(B) People in the region who continue to be employed and who have relatives who have lost their jobs commonly assist those relatives financially.

If people who are employed assist their relatives, then conclusion falls apart. Author's conclusion is that their actual spending is undiminished, but this choice says that there is a different reason that people are spending on. So actual spending could be undiminished and the remaining amount, they are spending on their families.

archanam9449 · Answer

The question is about assumption. Option A talks about debt. The main argument does not even contain any such information. Option A qualifies for a strengthening answer, but not assumption.

Parikshit07 · Answer

Hi Bunuel,

Can you help me understand option A, and how it is correct?

Thanks,
Parikshit

CrackverbalGMAT · Answer

Hi Parikshit

Let me try to answer your query. Analyzing the stimulus, we find:

Conclusion:  Actual spending by such people (people who still have their jobs) is undiminished.

Premise on which it is based (why):  There has been no unusual increase in the amount of money held by those people in savings accounts.

Clearly this is assuming the following: Income = New purchases + Money in savings accounts. Since the income (as they continue to have jobs) and money in savings account has remained constant, the conclusion is drawn that new purchases have also not reduced. The underlying assumption here is that there is no third avenue for people to spend their income.

With this, let us analyze the options:

(A) If people in the region who continue to be employed have debts, they are not now paying them off at an accelerated rate.  Correct. This states that a third avenue is not being used to spend their income.

(B) People in the region who continue to be employed and who have relatives who have lost their jobs commonly assist those relatives financially.  This states that  there is  a third, new, expense head for those who continue to have jobs. This, therefore, weakens the conclusion and cannot be an assumption on which it is based. Eliminate.

(C) If people in the region who have lost jobs get new jobs, the new jobs generally pay less well than the ones they lost.  Irrelevant. Does not address expenses of those who continue to have jobs. Eliminate.

(D) People in the region who continue to be employed are pessimistic about their prospects for increasing their incomes.  Irrelevant. Does not address expenses of those who continue to have jobs. Eliminate.

(E) There exist no statistics about sales of goods in the region as a whole.  If this were true, it would be impossible to draw conclusions about spending patterns of the population, and hence acts as a weakener. This, therefore, weakens the conclusion and cannot be an assumption on which it is based. Eliminate.

Hope this helps.

arushi118 · Answer

Option B is incorrect -- as it says that still employed people are helping their relatives. SO it can be that the "purchases" of the still employed people have decreased, they are helping their relatives so some amount of money is going away there too (but this is not a part of the "purchases" -- so the amount of money in the saving account has still not increased)
So this option tells us that the actual spending has actually decreases (opposite to what is stated in the passage)

But for option A: people are not paying their debts faster -- so the actual spending is undiminished.

The widespread staff reductions in a certain region’s economy are said

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The widespread staff reductions in a certain region’s economy are said

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