Bunuel wrote:
Following a banking crash in the country of Econa, the country has faced a recession that has included a contraction of the real estate sector, wherein sales are down by about twelve percent compared to two years ago when the recession began. Real estate firms have found, however, that the proportion of mortgage holders who paid their monthly installments on time fell sharply in the first year of the recession, but the following year it stabilized at its pre-recession level.
Which of the following, if true, most helps to explain the change between the first two years of the recession in the proportion of mortgage holders who paid their monthly installments on time?
A. Of the numerous Econan homeowners facing financial difficulties prior to the recession, almost all defaulted on their mortgages in the first year, surrendering their homes to the lenders.
B. Econan homeowners saw many of their costs, utilities, and taxes in particular, increase between the recession’s first and second years.
C. The total number of mortgage holders increased between the recession’s first and second years.
D. Real estate firms in Econa tried to bolster sales during the recession’s second year by arranging for low-interest mortgages.
E. Those segments of the real estate market that are relatively immune to the effects of a recession, such as the sale of real estate for public works, suffered no drop in sales during the recession’s first year.
Banking crash leads to recession --> real estate sector contracts --> sales down --> percentage of mortgage holders paying monthly installment on time fell in the first year --> percentage returned to pre-recession level in the second year
Missing-link: Between the percentage of mortgage holders paying monthly installment on time falling in the first year and the percentage returning to pre-recession level in the second year
Expectation from the correct answer choice: To explain why the percentage of mortgage holders paying monthly installment on time fell in the first year but returned to pre-recession level in the second year
Note: Please be extra careful when you see numbers/percentages/proportions in CR questions; often, the key lies in the numbers.
A. Correct. This answer choice, suggesting that among all the mortgage holders, almost all of those with financial difficulties before the recession defaulted in the first year and surrendered their homes, explains two developments; firstly, it explains that in the first year, owing to worse financial difficulties because of the recession, the proportion of mortgage holders who paid their monthly installments on time declined; secondly, it explains that, in the second year, owing to only financially capable mortgage owners now paying the mortgage, the proportion of mortgage holders who paid their monthly installments on time increased and returned to pre-recession level; overall, this answer choice explains why the percentage of mortgage holders paying monthly installment on time fell in the first year but returned to pre-recession level in the second year. Because this answer choice clarifies the exact discrepancy, this answer choice is correct.
B. If there was an increase in the expenses of homeowners in both the years, the percentage of mortgage holders who paid their monthly installments on time should have been affected similarly in both the years. Further, an “increase in costs” of homeowners in the second year raises further concern over, rather than explains, why the percentage of mortgage holders paying monthly installment on time “increased” in the second year. Overall, this answer choice does not explain the change between the first and the second year of the recession in the proportion of mortgage holders who paid their monthly installments on time. Because this answer choice does not explain the discrepancy in the argument, this answer choice is incorrect.
C. The argument is concerned with the “percentage of mortgage holders paying monthly installments on time” and not with the “total number of outstanding mortgages”; so, this answer choice, suggesting an increase in the total number of mortgage holders over the two years, fails to explain the change between the first and the second year of the recession in the proportion of mortgage holders who paid their monthly installments on time. Because this answer choice does not explain the discrepancy in the argument, this answer choice is incorrect.
D. Trap. This answer choice, suggesting the availability of low-interest mortgages in the second year, indicates a likely increase in the “total number of mortgages” in the second year but provides no information about why the “proportion of mortgage holders who paid their monthly installments on time” increased in the second year. Because this answer choice does not explain the discrepancy in the argument, this answer choice is incorrect.
E. This answer choice, relating to only certain segments of the real estate market, refers to only a part of the entire market and is thus limited in scope. Further, this answer choice relates to the sale of properties and not with the number of mortgages, thus failing to address why the “proportion of mortgage holders who paid their monthly installments on time” increased in the second year. Because this answer choice does not explain the discrepancy in the argument, this answer choice is incorrect.
A is the best choice.
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01 Jan 2022, 05:00
44%
(02:32)
wrong 
