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Twelve years ago and again five years ago, there were

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Director
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Twelve years ago and again five years ago, there were [#permalink]

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24 Apr 2006, 06:31
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Twelve years ago and again five years ago, there were extended periods when the Darfir Republic's currency, the pundra, was weak: its value was unusually low relative to the world's most stable currencies. Both times a weak pundra made Darfir's manufactured products a bargain on world markets, and Darfir's exports were up substantially. Now, some politicans are saying that in order to cause another similarily sized increase in exports, the government should allow the pundra to become weak again.

Which of the following if true provides the government with the strongest grounds to doubt the politician's recommendation, if followed will achieve its aim?

A) Several of the politicians now recommending that the pundra be allowed to beomce weak made that same recommendation before each of the last two periods of currency weakness

B) After several decades of operating well below peak capacity, Darfir's manufacturing sector is now near peak levels

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 significant

D) Those countries whos manufacturing products compete with Darfir's on the world market all have stable currencies

E) A sharp improvement in the efficiency of Darfir's manufacturing plants would make Darfir's products a baragain on world markets even without any weakening of the pundtra relative to other currencies

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Director
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24 Apr 2006, 07:39
I am going with E.
rest all of them seem pretty much out of scope

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Manager
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24 Apr 2006, 07:40
seems to be a tough one to me.

Which of the following if true provides the government with the strongest grounds to doubt the politician's recommendation, if followed will achieve its aim?

E fulfils one one condition in the question that the govt will achieve its aim by only increasing the o/p ..
but dont knw how will it cast doubt on politicians approach of artificially weakening a currency.

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Director
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24 Apr 2006, 07:52
oa is B, from gmatprep

imo

if the manufacturing products are already at peak levels, why would you want to disturb it?

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Director
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24 Apr 2006, 08:02

I cant see how though.
If B is the answer, we are assuming that the country is exporting everything that it has manufactured. If the export demand further increases, then the manufacturing sector may not be able to cope.

But why do we want to assume that?

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24 Apr 2006, 11:46
Yeah I wud go with B!

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24 Apr 2006, 11:48
sm176811 wrote:
Yeah I wud go with B!

Can you plz explain..how did u get B?

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26 Apr 2006, 02:13
for me its only E
B they are at their peak level so even if ppl want to import these manufacturing plant dont raise their limit

but E is more logical means without making pundra weak if they already have acheived their target so whats the use of making it weak
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26 Apr 2006, 11:59
In my understanding the OA is B,because if manufacturing is at it's peak,then there is no scope of increasing manufacturing of products to meet the increasing demand if the currency is weakened.
Hence the question of the effectiveness of weakening the
Pundra does not arise.

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Director
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12 Nov 2007, 08:59
Quote:
Which of the following if true provides the government with the strongest grounds to doubt the politician's recommendation, if followed will achieve its aim?

If followed ---which means -if the currency value is screwed why the plan will fail

Because -- There is no way to increase the output to meet the demand

E is out of scope

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12 Nov 2007, 16:06
i said B as well. Had it down to B and E, but in B we are told that manufacturing is near peak, and if this is the case, lowering the value of the pundra wont increase amnt of exports because resources are at max already

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24 Jul 2010, 04:49
Very tough one.
Any other explanation would be helpful.
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24 Jul 2010, 05:09
I went for E. Though to some extent B seems right too.

But in case of B we are talking of manufacturing while the whole argument revolves around exports.
How we kinda assume that all produced --> exported?

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24 Jul 2010, 05:24
I went for "D".

"Those countries whos manufacturing products compete with Darfir's on the world market all have stable currencies "

My reasoning - It states that "all" other countries competing with Darfir in world market have stable curriencies.
This weakens the politician's claim which is based on the assumption that a weak currency would result in improved exports.

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24 Jul 2010, 10:46
Maybe I didn't really think about the implications of "peak levels." I assumed that even if it is at peak there is still room for growth. If the currency were to decrease, than demand would definitely increase for the product and the industry would grow. (EG China)

Maybe bringing in outside thinking is bad on this one. I'm not sure if I like this question.

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28 Aug 2010, 03:07
OA is B. However, it could be that although we are operating at peak levels, that production has not necessary to be exported, so weakening the currency could promote the exports in that case.
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01 Sep 2010, 09:59
I narrowed to C and E but picked C...

I think B makes sense. Good Question.

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01 Sep 2010, 16:27
I understand why B is right, but why E is wrong?

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Manager
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02 Sep 2010, 02:24
Tough one

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Manager
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02 Sep 2010, 03:39
I got B!

if the manufacturing sector is working at the peak level now, they are producing the max goods now and thus even when pundra is allowed to become weak again, there cant be any increase in the exports a expected.

IMO B directly weakens the conclusion.

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Re: Darfir CR   [#permalink] 02 Sep 2010, 03:39

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